POS AM - Post-Effective amendments for registration statement

As filed with the Securities and Exchange Commission
on April 25, 2016

Registration No. 333-191783

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

POST-EFFECTIVE AMENDMENT NO. 3

TO

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

WALKER INNOVATION INC.

(Exact name of registrant as specified in its
charter)

Delaware

(State or other jurisdiction ofincorporation or organization)

6794

(Primary Standard IndustrialClassification Code Number)

30-0342273

(I.R.S. Employer IdentificationNumber)

Two High Ridge Park

Stamford, CT 06905

Phone: (203) 461-7200

(Address, including zip code, and telephone number,
including area code, of registrant's principal executive
offices)

Jonathan Ellenthal

Vice Chairman, Chief Executive Officer

Two High Ridge Park

Stamford, CT 06905

Phone: (203) 461-7200

Jonathan Siegel

Chief Administrative Officer, General Counsel,
Secretary

Two High Ridge Park

Stamford, CT 06905

Phone: (203) 461-7200

(Name, address, including zip code, and telephone
number, including area code of agent for service)

Copies to:

Mitchell S. Nussbaum, Esq.

Loeb & Loeb LLP

345 Park Avenue

New York, NY 10154

(212) 407-4000

Approximate date of commencement of proposed sale
to public: From time to time after the effective date of this
Registration Statement.

If any of the securities being
registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box.x

If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under
the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective
registration statement for the same offering.¨

If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering.¨

If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering.¨

Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
"large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated
filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

(Do not check if a smaller reporting
company)

Smaller reporting company

x

This Registration Statement is a Post-Effective
Amendment No. 3 to Registration Statement No. 333-191783 and shall
hereafter become effective in accordance with Section 8(c) of the
Securities Act of 1933, as amended.

EXPLANATORY NOTE

This Post-Effective Amendment No. 3 to the
Registration Statement on Form S-1 (Registration No. 333-191783)
(the "Registration Statement"), which was declared effective by the
Commission on February 13, 2014 is being filed to update disclosure
to include recent audited financial statements and other
information, including updates to our Management's Discussion and
Analysis and our Business description.

WALKER INNOVATION INC.

(formerly known as Patent Properties, Inc.)

Up to 8,856,463 shares of Common Stock

This prospectus relates to the offer and resale of
up to 8,856,463 shares of our common stock, par value $0.001 per
share, by the selling stockholders named in this prospectus
beginning on page 12. 6,876,145 of such shares of common stock are
currently issued and outstanding and 1,980,318 are issuable upon
the exercise of warrants (the "Warrants") issued to the selling
stockholders.

Concurrently with the offering being made by the
selling stockholders named in this prospectus, an additional
5,309,167 shares of our common stock are being offered by those
selling stockholders named in a separate prospectus included in
Post- Effective Amendment No. 2 to the Registration Statement on
Form S-1 (File No.333-195190) (the "Post-Effective Amendment").

The selling stockholders may offer, sell or
distribute all or a portion of their shares publicly or through
private transactions at prevailing market prices or at negotiated
prices. We will not receive any of the proceeds from the sale of
the shares of common stock owned by the selling stockholders,
although we will receive proceeds upon the exercise of the
Warrants. We will bear all costs, expenses and fees in connection
with the registration of these shares. The selling stockholders
will bear all commissions and discounts, if any, attributable to
their sale of shares. See "Plan of Distribution" beginning on page
19 of this prospectus.

Mr. Jay Walker, the Executive Chairman of the Board
of Directors of the Company, has a controlling interest in Walker
Digital LLC. Walker Digital owns approximately 11% of our common
stock and owns 100% of the series B convertible preferred stock,
which series of preferred stock entitles Walker Digital to cast 80%
of the total votes that may be cast with respect to any matter
brought to the holders of common stock for a vote. As a result, the
company currently is, and subsequent to the sale of all of the
shares of common stock being offered by the selling stockholders,
will continue to be under the control of Walker Digital and Mr.
Walker.

Our common stock is traded on the OTCQB trading
platform operated by OTC Markets Group under the symbol "WLKR". On
April 22, 2016, the closing price of our common stock was $0.38 per
share. As of April 22, 2016, we had 20,741,572 shares of common
stock outstanding.

INVESTING IN OUR COMMON STOCK INVOLVES SIGNIFICANT
RISKS. YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS
BEGINNING ON PAGE 5 OF THIS PROSPECTUS BEFORE MAKING A DECISION TO
INVEST IN OUR COMMON STOCK. YOU SHOULD PURCHASE SHARES ONLY IF YOU
CAN AFFORD A COMPLETE LOSS OF YOUR INVESTMENT.

We may amend or supplement this prospectus from time
to time by filing amendments or supplements as required. You should
read the entire prospectus and any amendments or supplements
carefully before you make your investment decision.

Neither the Securities and Exchange Commission nor
any state securities commission has approved or disapproved of
these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal
offense.

Our securities are not being offered in any
jurisdiction where the offer is not permitted under applicable
local laws.

WALKER INNOVATION INC. HAS NOT REGISTERED THE SHARES
OF COMMON STOCK THAT MAY BE SOLD BY THE SELLING STOCKHOLDERS UNDER
THE SECURITIES LAWS OF ANY STATE. SELLING STOCKHOLDERS, AND ANY
BROKERS OR DEALERS, EFFECTING TRANSACTIONS IN THE SHARES SHOULD
CONFIRM THAT THE SHARES HAVE BEEN REGISTERED UNDER THE SECURITIES
LAWS OF THE STATE OR STATES IN WHICH SALES OF THE SHARES OCCUR AS
OF THE TIME OF SUCH SALES, OR THAT THERE IS AN AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES LAWS OF SUCH
STATES.

THIS PROSPECTUS IS NOT AN OFFER TO SELL ANY
SECURITIES OTHER THAN THE SHARES OF COMMON STOCK FOR SALE BY THE
SELLING STOCKHOLDERS . THIS PROSPECTUS IS NOT AN OFFER TO SELL
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH AN OFFER IS
UNLAWFUL.

i

PROSPECTUS
SUMMARY

The following summary highlights selected
information contained in this prospectus. Because it is a summary,
it does not contain all of the information you should consider
before making an investment decision. Before making an investment
decision, you should read the entire prospectus carefully,
including the "Risk Factors" section, the financial statements, and
the notes to the financial statements. Unless the context otherwise
requires, the "Company," "we," "our," "us" and similar expressions
refer to Walker Innovation Inc. This prospectus contains summaries
of the material terms of various agreements executed in connection
with the transactions described herein. The summaries of these
agreements are subject to, and are qualified in their entirety by,
reference to these agreements, all of which are incorporated herein
by reference.

Overview of the Business

Walker Innovation Inc. (formerly known as Patent
Properties, Inc.) has two distinct lines of businesses: we develop
and commercialize our unique portfolio of intellectual property
assets through our licensing and enforcement operations
(''Licensing and Enforcement'') and in early 2015 we launched the
innovation business, which previously consisted of Haystack
IQTM (formerly known as ''The United States Patent
UtilityTM'') (''Haystack IQ'') and currently includes
custom business innovation services pursuant to which the Company
seeks to perform custom innovation work for large companies seeking
to prototype and commercialize new businesses and new business
methods, referred to as the Company's ''Innovation'' business. The
Company is led by entrepreneur and inventor Jay Walker, who is best
known as the founder of Priceline.com and has twice been named by
TIME magazine as "one of the top 50 business leaders of the digital
age." Mr. Walker currently ranks as the world's 11th most patented
living individual, based on U.S. patent issuances according to
Wikipedia.

Risks Associated with Our Business

Investing in our common stock involves substantial
risk. Before participating in this offering, you should carefully
consider all of the information in this prospectus, including the
risks discussed in "Risk Factors" immediately following this
summary. In particular:

·

Our financial and operating
results may be uneven.

·

We may be considered a "personal
holding company" and may be required to pay personal holding
company taxes, which could have an adverse effect on our cash
flows, results of operations and financial condition.

In order to grow, we may have to
invest more resources in research and development than anticipated,
which could increase our operating expenses and negatively impact
our operating results.

·

Focusing our business model on
realizing the value of our intellectual property is a recent
initiative and may not result in anticipated benefits.

·

We may seek to internally develop
additional new inventions and intellectual property, which would
take time and would be costly. Moreover, the failure to obtain or
maintain intellectual property rights for such inventions would
lead to the loss of our investments in such activities.

·

We will depend on key
individuals, including Jay Walker.

·

Our Invention Assignment
Agreement with Jay Walker only relates to improvements to
the assets transferred to us on the Merger (as defined below) and
the predecessor to Haystack IQ.

·

In connection with patent
enforcement actions that we may conduct, a court may rule that we
have violated certain statutory, regulatory, federal, local or
governing rules or standards, which may expose us to certain
material liabilities.

·

The burdens of being a public
company may adversely affect our ability to pursue
litigation.

2

Financial Results

Historically, our revenues have fluctuated from
period to period and can vary significantly based on a number of
factors, including our ability to grant intellectual property
protection to parties that we enter into settlements with, which in
turn may depend on external trends and developments in our industry
and the law and their effect on our portfolio. We consider
significant revenue concentrations to include those counterparties
who account for 10% or more of our total revenues. For the years
ended December 31, 2015 and 2014, the amount of revenue we derived
from counterparties representing more than 10% of our Licensing
revenues was 99% (with three counterparties representing 48%,
another 40% and a third 11%) and 96% (with three counterparties
representing 45%, another 36% and a third 15%), respectively.

Selected Consolidated Financial Information

(In thousands)

Year Ended
December 31,

Year Ended
December 31,

2015

2014

Income Statement Data:

Total revenues

$

2,315

$

2,948

Cost of revenues

$

1,626

$

882

Net revenues

$

689

$

2,066

Net income (loss)

$

(10,402

)

$

(15,618

)

Balance Sheet Data:

Working capital

$

5,003

$

13,818

Total assets

$

8,578

$

16,163

Stockholders' equity

$

5,871

$

14,039

Employees

As of April 22, 2016, we have 11 full time
employees. In addition, although he is not an employee, Mr. Walker
has and will continue to devote a portion of his working effort to
us.

Corporate Information

Our offices are located at Two High Ridge Park,
Stamford, CT 06905. Our telephone number is (203) 461-7200.
Our website can be found at http://www.walkerinnovation.com.
The information contained in or that can be accessed through our
website is not intended to constitute and shall not be deemed to
constitute part of this prospectus.

3

FORWARD-LOOKING
STATEMENTS

This prospectus contains forward-looking statements
within the meaning of applicable securities laws. These statements
relate to anticipated future events, future results of operations
or future financial performance. These forward-looking statements
include, but are not limited to, statements relating to projections
about our future results, statements about our plans, strategies,
business prospects, changes and trends in our business and the
markets in which we operate. Additionally, statements concerning
future matters such as financial results and other statements
regarding matters that are not historical are forward-looking
statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "might," "should,"
"intends," "expects," "plans," "goals," "projects," "anticipates,"
"believes," "estimates," "predicts," "potential," or "continue" or
the negative of these terms or other comparable terminology.

These forward-looking statements are only
predictions, are uncertain and involve substantial known and
unknown risks, uncertainties and other factors which may cause our
actual results, levels of activity or performance to be materially
different from any future results, levels of activity or
performance expressed or implied by these forward-looking
statements. The "Risk Factors" section of this prospectus sets
forth detailed risks, uncertainties and cautionary statements
regarding our business and these forward-looking statements.

We cannot guarantee future results, levels of
activity or performance. You should not place undue reliance on
these forward- looking statements, which speak only as of the date
that they were made. These cautionary statements should be
considered with any written or oral forward-looking statements that
we may issue in the future. Except as required by applicable law,
including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform
these statements to reflect actual results, later events or
circumstances or to reflect the occurrence of unanticipated
events.

THIS PROSPECTUS IS NOT AN OFFER TO SELL ANY
SECURITIES OTHER THAN THE SHARES OF COMMON STOCK FOR SALE BY THE
SELLING STOCKHOLDERS. THIS PROSPECTUS IS NOT AN OFFER TO SELL
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH AN OFFER IS
UNLAWFUL.

You should rely only on the information contained in
this prospectus. Neither we nor the selling stockholders have
authorized anyone to provide you with information that is different
from that contained in this prospectus. We and the selling
stockholders take no responsibility for, and can provide no
assurance as to the reliability of, any other information that
others may give you. If anyone provides you with different
information, you should not rely on it. You should assume that the
information contained in this prospectus is accurate only as of the
date on the front cover of this prospectus. Neither the delivery of
this prospectus nor any sale made in connection with this
prospectus shall, under any circumstances, create any implication
that there has been no change in our affairs since the date of this
prospectus or that the information contained by reference to this
prospectus is correct as of any time after its date.

THE OFFERING

This prospectus relates to the offer and resale of
up to 8,856,463 shares of our common stock, par value $0.001 per
share, by the selling stockholders named in this prospectus
beginning on page 15. 6,876,145 of such shares of common stock are
currently outstanding and 1,980,318 are issuable upon the exercise
of Warrants issued to the selling stockholders.

Common stock being offered by the
selling stockholders:

8,856,463

Total shares of common stock
outstanding as of April 22, 2016:

20,741,572

Common Stock to be outstanding
after the offering (assuming full exercise of the
Warrants):

22,721,890

Terms of the offering:

The selling stockholders will
determine when and how they will dispose of the common stock
offered pursuant to this prospectus. For additional information
concerning the offering, see "Plan of Distribution" beginning on
page 19.

4

Use of proceeds:

We will not receive any of the
proceeds from the sale of shares of common stock by the selling
stockholders. However, to the extent that the Warrants are
exercised for cash, we will receive proceeds from any exercise of
the Warrants up to an aggregate of $5,940,954. We intend to use any
proceeds received from the exercise of the Warrants for working
capital and other general corporate purposes.

OTCBB Ticker symbol:

WLKR

Risk Factors:

Before investing in our common
stock, you should carefully read and consider the information set
forth in "Risk Factors" beginning on page 5 and other information
included in this prospectus for a discussion of factors you should
consider before deciding to invest in shares of our common
stock.

RISK
FACTORS

We face a variety of risks that may affect our
business, financial condition, operating results, the trading price
of our common stock, or any combination thereof. You should
carefully consider the following information and the other
information in this prospectus in evaluating our business and
prospects and before making an investment decision with respect to
our common stock. If any of these risks were to occur, our
business, financial condition, results of operations or prospects
could be materially and adversely affected. In such an event, the
market price of our common stock could decline and you could lose
all or part of your investment. The risks and uncertainties we
describe below are not the only ones facing us. Additional risks
not presently known to us or that we currently deem immaterial may
also affect our business.

Risks Related to our Company, our Business and
our Industry

We have a recent history of significant operating
losses, and our Innovation Business has limited operating
history.

We experienced net losses of $10.4 million during
the year ended December 31, 2015 and $15.6 million during the
year ended December 31, 2014. As of December 31, 2015, we had an
accumulated deficit of $38.5 million. The losses and accumulated
deficit were primarily due to the costs associated with the Merger
as well as investments we made to launch our new business as well
as invest in litigation campaigns. We anticipate that cost of
revenue and operating expenses will increase in the foreseeable
future as we seek to continue to grow our business and acquire
customers and develop our platform and new applications. If our
assumptions regarding these and other similar risks and
uncertainties, which we use to plan our business, are incorrect or
change as we gain more experience operating our business or due to
changes in our industry, or if we do not address these challenges
successfully, our operating and financial results could differ
materially from our expectations and our business could suffer.
Many of our efforts to generate revenue from our business are new
and unproven, and any failure to increase our revenue or generate
revenue from new applications and services could prevent us from
attaining profitability. Our prior losses, combined with any
potential future losses, have adversely affected our stockholders'
equity and working capital position. As a result of these factors,
we may need to raise additional capital through debt or equity
financings in order to fund our operations, and such capital may
not be available on reasonable terms, if at all.

Our financial and operating results may be
uneven.

Our quarterly operating results may fluctuate
substantially. As such, our operating results will be difficult to
predict, and you should not rely on quarterly or annual comparisons
of our results of operations as an indication of our future
performance. Factors that could cause our operating results to
fluctuate during any period or that could adversely affect our
ability to achieve our revenue goals include the progress and
status of our litigations, including settlement negotiations, our
ability to protect and enforce our intellectual property rights,
changes in demand for products that incorporate our inventions,
revenue recognition principles, and changes in accounting
policies.

We expect to spend a significant amount of resources
to enforce our patents. If new legislation, regulations or rules
are implemented either by Congress, the U.S. Patent and Trademark
Office (the "USPTO"), or the courts that impact the patent
application process, the patent enforcement process or the rights
of patent holders, these changes could negatively affect our
expenses and revenue and any reductions in the funding of the USPTO
could negatively impact the value of our assets. United States
patent laws have been amended by the Leahy-Smith America Invents
Act, or the America Invents Act. The America Invents Act includes a
number of significant changes to U.S. patent law. In general, the
legislation attempts to address issues surrounding the
enforceability of patents and the increase in patent litigation by,
among other things, establishing new procedures for patent
litigation. For example, the America Invents Act changes the way
that parties may be joined in patent infringement actions,
increasing the likelihood that such actions will need to be brought
against individual parties allegedly infringing by their respective
individual actions or activities. At this time, it is not clear
what, if any, long term impact the America Invents Act will have on
the operation of our enforcement business. However, the America
Invents Act and its implementation could increase the uncertainties
and costs surrounding the enforcement of our patented technologies,
which could have a material adverse effect on our business and
financial condition.

5

While other bills considered in Congress in 2014 -
including The Innovation Act sponsored by House Judiciary Chairman,
Robert Goodlatte which would require non-practicing entities that
bring patent infringement lawsuits to pay legal costs of the
defendants if the lawsuits are unsuccessful - were not ultimately
passed into law, there can be no assurance that Congress will not
consider similar legislation in the future. Several states also
adopted laws regarding patent assertion activities in 2014 while
others have such legislation under review.

In addition, the U.S. Department of Justice ("DOJ")
has conducted reviews of the patent system to evaluate the impact
of patent assertion entities on industries in which those patents
relate. It is possible that the findings and recommendations
of the DOJ could impact the ability to effectively license and
enforce standards-essential patents and could increase the
uncertainties and costs surrounding the enforcement of any such
patented technologies.

Finally, new rules regarding the burden of proof in
patent enforcement actions could significantly increase the cost of
our enforcement actions, and new standards or limitations on
liability for patent infringement could negatively impact our
revenue derived from such enforcement actions.

Changes in interpretations of patent law could
adversely impact our business.

Our success in reexamination and enforcement
proceedings will rely, in part, on the uniform and historically
consistent application of patent laws and regulations. The courts'
interpretations of patent laws and regulations continue to evolve,
and the courts may continue to alter or refine their application of
laws and regulations. Changes or potential changes in judicial
interpretation could have a negative impact on our ability to
monetize our patent rights. Our ability to achieve and enforce
litigation settlements, often in the form of license and/or patent
sale agreements, may also be impacted by judicial interpretation.
Further, such judicial interpretation may have unforeseeable
collateral consequences, including affecting rights of our
contractual counter partners and others holders not party to the
matter being considered by such court.

On June 19, 2014, the U.S. Supreme Court issued a
landmark decision in which it significantly tightened the standard
for patentability of software patents. Alice Corp. Pty.
Ltd. v. CLS Bank Int'l, 134 S. Ct. 2347 (2014). Specifically,
the U.S. Supreme Court stated that if you have an idea so abstract
that it cannot be patented, simply tying it to a "generic computer
cannot transform a patent-ineligible abstract idea into a
patent-eligible invention." The U.S. Supreme Court further stated
that tying the abstract idea to "purely functional and generic"
hardware would, similarly, not make the idea patentable. Arguably,
the Alice decision is intended to limit the
validity of poor quality software patents.
The Alice decision will provide accused infringers
of software patents new arguments to challenge the validity of such
patents. Practically, the effects of
the Alice decision are still being assessed as
patent holders, attorneys, the USPTO, and courts, are coping to
determine the proper bounds of the Alice decision.
The Alice decision could potentially have a negative
effect on the validity of some of our patents.

On January 20, 2015, the U.S. Supreme Court decided
another patent case, Teva Pharmaceuticals USA, Inc. v. Sandoz,
Inc. In Teva, the Court overturned the long-standing
practice that claim construction decision made by district courts
were given de novo review on appeal. Instead, the Supreme Court
held that when claim construction is based on extrinsic evidence, a
district court's findings of subsidiary facts are to be reviewed
for clear error, while its ultimate claim construction is to be
reviewed de novo. This change in how claim construction decisions
are reviewed on appeal may have an impact on how parties handle
patent litigation in the district courts. This could increase our
litigation expenses. The full impact of the Teva decision on
patent litigation at the district court level is yet to be
determined.

On May 26, 2015, the U.S. Supreme Court decided
Commil USA LLC v. Cisco Systems, Inc. In this case, the
Supreme Court held that a good faith belief that a patent is
invalid does not provide an accused infringer with a defense
against a charge of inducing patent infringement. The Court stated
that permitting such a defense would undermine the statutory
presumption of validity enjoyed by issued U.S. patents under 35
U.S.C. § 282. The long term affect of this ruling is yet to be seen
as it is implemented by the district courts. However, this ruling
has eliminated a defense available to parties accused of inducing
patent infringement. This result could be beneficial to our patent
enforcement efforts.

6

Our preferred shares bear disproportionate voting
rights.

The holders of our preferred shares have the right
to cast 80.0% of the votes to be cast on any matter involving a
stockholder vote, including the election of all directors. All of
our preferred shares are held by Walker Digital, and Walker Digital
holds additional shares of our common stock, entitling it to cast
in excess of 80.0% of the votes entitled to be cast with respect to
any matter on which our stockholders are entitled to vote.
Accordingly, the holders of our preferred shares are able to
maintain control of all actions taken by us, including the election
of our directors.

We may be considered a "personal holding company"
and may be required to pay personal holding
company taxes, which would have an adverse effect on our cash
flows, results of operations and financial condition.

Under the Internal Revenue Code, any corporation
that qualifies as a "personal holding company" may have to pay
personal holding company taxes in addition to regular income
taxes. A corporation qualifies as a personal holding company
for a given tax year if (1) at any time during the last
half of that tax year more than 50.0% of the value of its
outstanding stock is held by five or fewer individuals and
(2) at least 60.0% of the company's adjusted ordinary gross
income constitutes "personal holding company income." We
may be subject to personal holding taxes in the
future. Whether we will be a personal holding company for
subsequent years will depend upon whether the share ownership and
company adjusted gross income requirements are satisfied. If
we no longer satisfy the stock ownership requirement for personal
holding company status, our ability to demonstrate that we are no
longer a personal holding company may nevertheless be limited, as
doing so may require the cooperation of our direct and indirect
stockholders. Further, our shares are not currently subject to
ownership restrictions that would help us establish that we did not
satisfy the stock ownership requirement for personal holding
company status. As a personal holding company, our
undistributed personal holding company income, which is
generally taxable income with certain adjustments, including a
deduction for U.S. federal income taxes and dividends paid, will be
taxed at a rate of 20.0% (in addition to regular corporate taxes)
under current law. Any payment of personal holding company
taxes by us will have an adverse effect on our cash flows, results
of operations and financial condition and may have an adverse
effect on the value of our stock.

In order to grow, we may have to invest more
resources in research and development than anticipated, which could
increase our operating expenses and negatively impact our operating
results.

If new competitors, technological advances by
existing competitors, and/or development of new technologies or
other competitive factors require us to invest significantly
greater resources than anticipated in our patent development
efforts, our operating expenses could increase. If we are required
to invest significantly greater resources than anticipated in
patent development efforts without an increase in revenue, our
operating results could decline.

Any expense reduction initiatives that we undertake
may not deliver the expected results and these actions may
adversely affect our business.

In late 2015, we announced that we intended to take
measures to improve our operating leverage, including reducing
headcount, managing our expenses more effectively, and minimizing
our capital spending requirements. As we take these or other
actions to better align our operating expenses with our revenue,
manage our costs better, and more efficiently manage our business,
such actions could result in disruptions to our operations and
adversely affect our business. To effectively manage our
business with fewer than anticipated employees, we will need to
spend significant resources to further automate our business
processes, improve our technology infrastructure, our operational,
financial and management controls, and our reporting systems and
procedures. These enhancements and improvements will require
capital expenditures and allocation of valuable management and
employee resources. We expect to continue to actively monitor our
operating expenses; however, if we do not fully realize the
anticipated benefits of any expense reduction initiatives,
including reductions in headcount, our business could be adversely
affected. In addition, we cannot be sure that our efforts to manage
expenses and improve our operating leverage will be
successful.

If we are not able to adequately protect our patent
rights, our business would be negatively impacted.

We believe our patents are valid, enforceable and
valuable. Notwithstanding this belief, third parties may make
claims of invalidity with respect to our patents, and such claims
could give rise to material additional costs, jeopardize or
substantially delay a successful outcome of litigation we are or
may become involved in, divert resources away from our other
activities, or otherwise materially and adversely affect our
business. Similar challenges could also prevent us from
obtaining additional patents in the future. Even if we are
successful in enforcing our rights, our patents may be less
valuable than we currently expect. These risks may be
heightened in countries other than the United States, and may be
negatively affected by the fact that legal standards in the United
States and elsewhere for protection of intellectual property rights
in Internet-related businesses are uncertain and still
evolving. In addition, there are a significant number of
United States and foreign patents and patent applications in our
areas of interest, and we expect that significant litigation in
these areas will continue, and will add uncertainty to the value of
certain patents and other intellectual property rights in our areas
of interest. If we are unable to protect our intellectual
property rights or otherwise realize value from them, our business
would be negatively affected.

7

More patent applications are filed each year
resulting in longer delays in getting patents issued by the
USPTO.

We hold numerous pending patents applications and we
anticipate prosecuting additional patent applications. We have
identified a trend of increasing patent applications each year,
which may result in longer delays in obtaining approval of pending
patent applications. The application delays could cause delays in
recognizing revenue from these patents and could cause us to miss
opportunities to license patents before other competing
technologies are developed or introduced into the market.

The fixed terms of patents limit our business
opportunity.

Patents have fixed terms. If we fail to create value
from our patents prior to their expiration, our litigation and
licensing opportunities will be eliminated, which would negatively
impact our financial condition and results of operations.

Future innovations could make our patents
obsolete.

Our success depends, in part, on continued demand
for products that incorporate our patented inventions. Changes in
technology or customer requirements could render these patented
inventions obsolete or unmarketable.

Focusing our business model on realizing the value
of our intellectual property is a recent initiative and may not
result in anticipated benefits.

We have a limited operating history and a limited
track record with respect to our intellectual property licensing
and enforcement business, which could make it difficult to evaluate
our future prospects. We will encounter risks and difficulties
frequently experienced by companies with evolving business
strategies. If we do not manage these risks successfully, our
business and operating results will be adversely affected. In
addition, our intellectual property strategy may have other adverse
consequences, such as employee attrition, the loss of employees
with valuable knowledge or expertise or a negative impact on
employee morale. Our strategy may place increased demands on our
personnel and could adversely affect our ability to attract and
retain talent and to perform our accounting, finance and
administrative functions. We may not realize all of the anticipated
benefits of our strategies.

We may seek to internally develop additional new
inventions and intellectual property, which would take time and
would be costly. Moreover, the failure to obtain or maintain
intellectual property rights for such inventions would lead to the
loss of our investments in such activities.

Mr. Walker has significant experience as an
inventor. As such, we expect that part of our business may include
the internal development of new inventions or intellectual property
relating to assets transferred to us in the Merger or that we have
developed and seek to monetize. However, this aspect of our
business would likely require significant capital and would take
time to achieve. Such activities could also distract our management
team from its other business initiatives, which could have a
material and adverse effect on our business. There is also the risk
that our initiatives in this regard would not yield any viable new
inventions or technology, which would lead to a loss of our
investments in time and resources in such activities.

We cannot be certain that patents will be issued as
a result of any future applications, or that any of our patents,
once issued, will provide us with adequate protection from
competing products or licensing and enforcement opportunities. For
example, issued patents may be circumvented or challenged, declared
invalid or unenforceable, or narrowed in scope. Our failure to
obtain or maintain intellectual property rights for our inventions
would lead to the loss of our investments in such activities, which
would have a material and adverse effect on our company.

Our Invention Assignment Agreement with Jay Walker
Only Relates to Improvements to the Assets Transferred to Us in the
Merger and the Predecessor to Haystack IQ.

Pursuant to the terms of the Invention Assignment
Agreement we have entered into with Mr. Walker, we have been
granted rights only in connection with improvements to the assets
transferred to us in the Merger and that we developed, including
The United States Patent Utility, the predecessor to Haystack IQ.
Accordingly, we may not be entitled to any other intellectual
property Mr. Walker may develop in the future, including
intellectual property that Mr. Walker may choose to monetize and
commercialize other than through Walker Innovation. Stockholders in
the Company should not expect that Mr. Walker will seek to develop
or commercialize intellectual property for the benefit of Walker
Innovation, other than as explicitly provided for in the Invention
Assignment Agreement, which may affect the value placed on the
Company by industry analysts or other investors, which would likely
affect the price at which our common stock trades in the public
market.

8

We will depend on key individuals, including Jay
Walker.

Our future success depends largely upon the service
of our directors, executive officers and other key management and
technical personnel, including Mr. Walker. Our success also depends
on our ability to continue to attract, retain and motivate
qualified personnel with specialized patent, engineering and other
skills. The market for such talent in our industry is extremely
competitive. Our ability to attract and retain qualified personnel
could be affected by any adverse decisions in any litigation or
arbitration and by our ability to offer competitive cash and equity
compensation and work environment conditions. The failure to
attract and retain such persons with relevant and appropriate
experience could interfere with our ability to enter into new
license agreements and undertake additional technology and product
development efforts, as well as our ability to meet our strategic
objectives.

Our technology development activities may experience
delays.

We may experience technical, financial, resource or
other difficulties or delays related to the development of our
patents and businesses. Delays may have adverse financial effects
and may allow competitors with comparable technology offerings to
gain an advantage over us. There can be no assurance that our
development efforts will ultimately be successful. Moreover,
certain of our technologies have not been fully tested in
commercial use, and it is possible that they may not perform as
expected. In such cases, our business, financial condition and
operating results could be adversely affected, and our ability to
secure licensees and other business opportunities could be
diminished.

Our assets include patents that will be integral to
our business and revenues. Competitors may challenge the validity,
scope, enforceability and ownership of those patents. Their
challenges may include reexamination requests in the relevant
patent and trademark office. Reexamination proceedings are costly
and time-consuming, and we cannot predict their outcome or
consequences. Such proceedings may narrow the scope of our claims
or may cancel some or all of our claims. If some or all of our
patent claims are canceled, we could be prevented from enforcing or
earning future revenues from such patents. We cannot assure that
the validity and enforceability of our patents will be maintained
or that our patents will be determined to be applicable to any
particular product or standard. Even if our claims are not
canceled, enforcement actions against alleged infringers may be
stayed pending resolution of reexaminations, or courts or tribunals
reviewing our patent claims could make findings adverse to our
interests based on facts presented in reexamination proceedings.
Irrespective of outcome, reexamination challenges may result in
substantial legal expenses and diversion of management's time and
attention away from our other business
operations. In this regard, the Company
is also involved in a legal action arising from claims related to
certain patent families we received from Walker Digital, LLC
("Walker Digital") by recorded assignment at the time of the Merger
due to an adverse judicial decision relating to
interpretation of the terms of a settlement agreement entered into
by Walker Digital with a third party prior to the Merger. Although
the decision does not specifically address the Company's patents,
the Company has been notified by the third party that they believe
the court's decision supports a claim that such patent families be
conveyed to them by assignment. The third party has also indicated
it may seek damages against the Company arising from that same set
of facts. Following discussions with Walker
Digital and the third party to determine appropriate next steps,
Walker Digital and the Company commenced an arbitration on March
31, 2015 against the third party seeking binding clarification of
the provisions of the relevant settlement agreement giving rise to
such claims and the particular patents subject
thereto. On November 30, 2015, the parties agreed to
stay the arbitration. The stay, which has been amended, will expire
upon ten business days notice by either party. An adverse decision
in the arbitration or in other forums described above or the terms
of a settlement could limit the value of our inventions or result
in a loss of our proprietary rights, which could negatively impact
our stock price, our results of operations, our cash flows, our
business and our financial position.

Our business depends on a number of costly
litigation, arbitration and administrative proceedings to enforce
our intellectual property rights.

The cost of enforcing, protecting and defending our
intellectual property may be significant. Our business model
requires litigation to enforce our intellectual property rights. In
addition, third parties could commence litigation against us
seeking to invalidate our patents or obtain a determination that
our patents are not infringed, are not essential, are invalid or
are unenforceable. As a result of any such litigation, we could
lose our proprietary rights.

Historically, our revenue has been generated from
settling litigation matters.

The revenues we have generated were the result of
settlement negotiations with certain defendants in connection with
patent infringement cases. In the past, these revenues were
one-time payments made under non-exclusive license agreements
entered into by us and the defendants to settle such disputes. For
the years ended December 31, 2015 and 2014, the amount of
revenue we derived from counterparties representing more than 10%
of our Licensing revenues was 99% (with three counterparties
representing 48%, another 40% and a third 11%) and 96% (with three
counterparties representing 45%, another 36% and a third 15%),
respectively. We cannot assure you that all such current disputes
or any future disputes will be settled in such a manner as to
generate significant revenues in the future.

9

Trial judges and juries often find it difficult to
understand complex patent enforcement litigation, and as a result,
we may need to appeal adverse decisions by lower courts in order to
successfully enforce our patents.

It is difficult to predict the outcome of patent
enforcement litigation at the trial level. It is often difficult
for juries and trial judges to understand complex, patented
technologies, and as a result, there is a higher rate of successful
appeals in patent enforcement litigation than more standard
business litigation. Such appeals are expensive and time consuming,
resulting in increased costs and delayed revenue. Although we plan
to diligently pursue enforcement litigation, we cannot predict with
significant reliability the decisions made by juries and trial
courts.

Federal courts are becoming more crowded, and as a
result, patent enforcement litigation is taking longer.

Our patent enforcement actions will be prosecuted
almost exclusively in federal court. Federal trial courts that hear
patent enforcement actions also hear criminal cases. Criminal cases
always take priority over our actions. As a result, it is difficult
to predict the length of time it will take to complete an
enforcement action. Moreover, we believe there is a trend in
increasing numbers of civil lawsuits and criminal proceedings
before federal judges, and as a result, we believe that the risk of
delays in our patent enforcement actions will have a greater effect
on our business in the future unless this trend changes.

In connection with patent enforcement actions that
we may conduct, a court may rule that we have violated certain
statutory, regulatory, federal, local or governing rules or
standards, which may expose us to certain material liabilities.

In connection with our patent enforcement actions we
intend to bring or maintain, it is possible that a defendant may
request and/or a court may rule that we have violated statutory
authority, regulatory authority, federal rules, local court rules,
or governing standards relating to the substantive or procedural
aspects of such enforcement actions. In such event, a court
may issue monetary sanctions against us or award attorney's fees
and/or expenses to a defendant(s), which could be material, and if
we are required to pay such monetary sanctions, attorneys' fees
and/or expenses, such payment could materially harm our operating
results and our financial position.

Our litigation may be time-consuming, costly and we
cannot anticipate the results.

We expect to spend a significant amount of our
financial and management resources to pursue litigation
matters. We believe that these litigation matters and others
that we may in the future determine to pursue could continue for
years and consume significant financial and management
resources. The counterparties to our litigation matters are
all large, well-financed companies with substantially greater
resources than us. We cannot assure you that any of our
litigation matters will result in a favorable outcome for
us. In addition, even if we obtain favorable interim rulings
or verdicts in particular litigation matters, they may not be
predictive of the ultimate resolution of the dispute. Also, we
cannot assure you that we will not be exposed to claims or
sanctions against us which may be costly or impossible for us to
defend. Unfavorable or adverse outcomes may result in losses,
exhaustion of financial resources or other adverse effects which
could encumber our ability to develop and commercialize
products.

Technology company stock prices are especially
volatile, and this volatility may depress the price of our common
stock.

The stock market has experienced significant price
and volume fluctuations, and the market prices of technology
companies have been highly volatile. We believe that various
factors may cause the market price of our common stock to
fluctuate, perhaps substantially, including, among others, the
following:

announcements by us or our competitors of
significant contracts, acquisitions, strategic partnerships, joint
ventures, capital commitments, new technologies, or patents;
and

·

failure to complete significant
transactions.

We are required to evaluate our internal control
over financial reporting in accordance with the Sarbanes-Oxley
Act.

We will be required to incur significant costs and
require significant management resources to evaluate our internal
control over financial reporting as required under the
Sarbanes-Oxley Act, and any failure to comply or any adverse result
from such evaluation may have an adverse effect on our stock
price.

The burdens of being a public company may adversely
affect our ability to pursue litigation.

As a public company, our management must devote
substantial time, attention and financial resources to comply with
U.S. securities laws. This may have a material adverse effect
on management's ability to effectively and efficiently pursue
litigation as well as our other business initiatives. In
addition, our disclosure obligations under U.S. securities laws
require us to disclose information publicly that will be available
to future litigation opponents. We may, from time to time, be
required to disclose information that may have a material adverse
effect on our litigation strategies. This information may
enable our litigation opponents to develop effective litigation
strategies that are contrary to our interests.

Risks Related to our Common Stock

Shares of our common stock that have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act") are subject to resale restrictions imposed by
Rule 144, including those set forth in Rule 144(i) which apply to a
former "shell company."

Pursuant to Rule 144 under the Securities Act, as
amended ("Rule 144"), a "shell company" is defined as a company
that has no or nominal operations and either no or nominal assets,
assets consisting solely of cash and cash equivalents or assets
consisting of any amount of cash and cash equivalents and nominal
other assets. As such, we were, until the consummation of the
Merger, a "shell company" pursuant to Rule 144, and as such, sales
of our securities pursuant to Rule 144 are not able to be made
until a period of at least twelve months has elapsed from the date
on which the information that is required by Form 10 to register
our securities under the Securities Exchange Act of 1934, as
amended, (the "Exchange Act") is filed with the Commission.
Therefore, any restricted securities we have sold or sell in the
future or issue to consultants or employees, in consideration for
services rendered or for any other purpose, will have no liquidity
until and unless such securities are registered with the Commission
and/or until six months after the date of issuance and we have
otherwise complied with the other requirements of Rule 144. As a
result, it may be harder for us to fund our operations and pay our
employees and consultants with our securities instead of cash.
Furthermore, it will be harder for us to raise funding through the
sale of debt or equity securities unless we agree to register such
securities with the Commission, which could cause us to expend
additional resources in the future. Our prior status as a "shell
company" could prevent us in the future from raising additional
funds, engaging employees and consultants, and using our securities
to pay for any acquisitions, which could cause the value of our
securities, if any, to decline in value or become worthless.

We may not qualify to meet listing standards to list
our stock on an exchange.

The Commission approved listing standards for
companies using reverse acquisitions, or reverse shell mergers, to
list on an exchange, which may limit our ability to become listed
on an exchange. We are considered a reverse merger company (i.e.,
an operating company that became an Exchange Act reporting company
by combining with a shell Exchange Act reporting company) that
cannot apply to list on NYSE, NYSE MKT or Nasdaq until our stock
has traded for at least one year on the U.S. OTC market, a
regulated foreign exchange or another U.S. national securities
market following the filing with the Commission or other regulatory
authority of all required information about the merger, including
audited financial statements. We would be required to maintain a
minimum $4 share price ($2 or $3 for NYSE MKT) for at least thirty
(30) of the sixty (60) trading days before our
application and the exchange's decision to list. We would be
required to have timely filed all required reports with the
Commission (or other regulatory authority), including at least one
annual report with audited financials for a full fiscal year
commencing after filing of the above information. To the extent
that we cannot qualify for a listing on an exchange, our ability to
raise capital will be diminished.

11

Because we are considered a reverse merger company,
we may not be able to attract the attention of brokerage firms.

Additional risks may exist since we are considered a
reverse merger company. Securities analysts of brokerage firms may
not provide coverage of us since there is little incentive to
brokerage firms to recommend the purchase of our common stock. No
assurance can be given that brokerage firms will want to conduct
any secondary offerings on our behalf in the future.

We may be subject to penny stock regulations and
restrictions and you may have difficulty selling shares of our
common stock.

The Commission has adopted regulations which
generally define so-called "penny stocks" as an equity security
that has a market price of less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exemptions.
Our shares of Common Stock may be deemed to be a "penny stock"
based upon the price of our common stock as of April 22, 2016 and
as such are subject to Rule 15g-9 under the Exchange Act, or the
Penny Stock Rule. This rule imposes additional sales practice
requirements on broker-dealers that sell such securities to persons
other than established customers and "accredited investors"
(generally, individuals with a net worth in excess of $1,000,000
exclusive of the value of their principal residence or annual
income exceeding $200,000, or $300,000 together with their
spouses). For transactions covered by Rule 15g-9, a
broker-dealer must make a special suitability determination for the
purchaser and receive the purchaser's written consent to the
transaction prior to sale. As a result, this rule may affect the
ability of broker-dealers to sell our securities and may affect the
ability of purchasers to sell any of our securities in the
secondary market.

For any transaction involving a penny stock, unless
exempt, the rules require delivery, prior to any transaction in a
penny stock, of a disclosure schedule prepared by the Commission
relating to the penny stock market. Disclosure is also required to
be made about sales commissions payable to both the broker-dealer
and the registered representative and current quotations for the
securities. Finally, monthly statements are required to be sent
disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stock.

There can be no assurance that our shares of common
stock will qualify for exemption from the Penny Stock Rule. In any
event, even if our common stock was exempt from the Penny Stock
Rule, we would remain subject to Section 15(b)(6) of the
Exchange Act, which gives the Commission the authority to restrict
any person from participating in a distribution of penny stock if
the Commission finds that such a restriction would be in the public
interest.

Provisions in our Certificate of Incorporation and
By-laws may deter third parties from acquiring us and could lead to
the entrenchment of our Board.

Our Certificate of Incorporation and By-laws contain
provisions that may make the acquisition of our company more
difficult without the approval of our Board, including the
following:

·

we have authorized undesignated preferred
stock, the terms of which may be established and shares of which
may be issued without stockholder approval;

·

vacancies on the Board may be filled only by
the directors; and

·

we require advance notice for stockholder
proposals.

These provisions could also discourage proxy
contests and make it more difficult for you and other stockholders
to elect directors of your choosing and cause us to take other
corporate actions that you desire. The anti-takeover defenses in
our Certificate of Incorporation and By-laws could discourage,
delay or prevent a transaction involving a change in control of our
company. These deterrents could adversely affect the price of our
common stock and make it difficult to remove or replace members of
our Board or management.

We are a "controlled company" within the meaning of
the Nasdaq and NYSE MKT rules and, as a result, we qualify for, and
rely on, exemptions from certain corporate governance
requirements.

Walker Digital controls a majority of our voting
stock. As a result, we are a "controlled company" within the
meaning of Nasdaq and NYSE MKT corporate governance standards.
Under the Nasdaq rules, a company of which more than 50% of the
voting power is held by an individual, group or another company is
a "controlled company", and if we are listed on Nasdaq we expect to
utilize exemptions relating to certain Nasdaq corporate governance
requirements, including:

·

The requirement that we have a Nominating
Committee that is composed entirely of independent
directors;

·

The requirement that we have a Compensation
Committee that is composed entirely of independent directors;
and

12

·

The requirement for an annual performance
evaluation of the Nominating and Compensation
Committees.

The NYSE MKT has similar rules and exemptions with
respect to controlled companies, which we expect to utilize if we
are listed on the NYSE MKT. As a result of these exemptions, we
anticipate that, if we are still a controlled company at the time
that we apply to be listed on the Nasdaq or the NYSE MKT, our
Nominating and Compensation Committees will not consist entirely of
independent directors and that we will not be required to have an
annual performance evaluation of the Nominating and Compensation
Committees. Accordingly, a holder of our common stock would not
have the same protections afforded to stockholders of companies
that are subject to all of the Nasdaq or NYSE MKT corporate
requirements.

USE OF
PROCEEDS

This prospectus relates to shares of our common
stock that may be offered and sold from time to time by the selling
stockholders identified in the section of this prospectus entitled
"Selling Stockholders." We will not receive any of the proceeds
from the sale of the shares by selling stockholders hereunder.

DIVIDEND
POLICY

We have not paid any cash dividends on our common
stock. Pursuant to our current strategy, we do not have a plan to
pay cash dividends. However, in the future, the Board may change
our strategy to one that includes a dividend or distribution on our
capital stock.

13

MARKET FOR
COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES

Our common stock is quoted on the OTCQB under the
symbol "WLKR".

The table below sets forth the high and low bid
prices for our common stock as reported on the OTCQB for the
periods indicated. The price quotations reflect inter-dealer
prices, without retail mark-up, mark-down or commission, and may
not represent actual transactions.

Fiscal Year 2014

High

Low

First Quarter

$

4.50

$

3.15

Second Quarter

4.00

3.00

Third Quarter

3.03

1.49

Fourth Quarter

2.76

2.05

Fiscal Year 2015

High

Low

First Quarter

$

2.70

$

1.20

Second Quarter

2.20

1.20

Third Quarter

1.40

0.26

Fourth Quarter

0.50

0.19

Fiscal Year 2016

High

Low

First Quarter

$

0.36

$

0.15

Second Quarter (through April 22, 2016)

$

0.38

$

0.25

As of April 22, 2016, there were 20,741,572 shares
of common stock outstanding, held by over 200 holders of record and
14,999,000 shares of our Series B Preferred Stock, held by a single
holder of record. The last reported sales price of our common stock
was $0.38 per share on April 22, 2016.

EQUITY
COMPENSATION PLAN INFORMATION

The following table contains information about our
common stock that may be issued under our equity compensation plans
as of December 31, 2015. See "Executive Compensation-Benefit
Plans" for a description of our stock option and incentive
plans:

Plan Category

Number of
securities to be
issued upon
exercise of
outstanding options (a)

Weighted average
exercise price of
outstanding options (b)

Number of
securities
remaining available
for future issuance
under equity
compensation plans
(excluding
securities reflected
in column (a)) (c)

The number of securities remaining available for future
issuances includes 1,344,176 shares available under our Incentive
Plan.

14

SELLING
STOCKHOLDERS

The following table sets forth as of April 22, 2016,
information regarding the current beneficial ownership of our
common stock by the persons identified, based on information
provided to us by them, which we have not independently verified.
Although we have assumed for purposes of the table that the selling
stockholders will sell all of the shares offered by this
prospectus, because they may from time to time offer all or some of
their shares under this prospectus or in another manner, no
assurance can be given as to the actual number of shares that will
be resold by the selling stockholders (or any of them), or that
will be held after completion of the resales. In addition, a
selling stockholder may have sold or otherwise disposed of shares
in transactions exempt from the registration requirements of the
Securities Act of 1933, as amended or otherwise since the date he
or she provided information to us. The selling stockholders are not
making any representation that the shares covered by this
prospectus will be offered for sale. Except for Dr. Schiller who is
a member of our Board of Directors, the former Chairman of our
Board of Directors and our former Chief Executive Officer and Mr.
Nyweide who is our former Chief Financial Officer, Executive Vice
President-Corporate Development, Treasurer and Secretary, no
selling stockholder has held any position nor had any material
relationship with us or our affiliates during the past three
years.

Broadband Agreements

In connection with the Merger and the Placement (as
defined below), on July 10, 2013, we entered into a Restricted
Stock Agreement (the "Restricted Stock Agreement") with Broadband
Capital Management LLC ("BCM"). The Restricted Stock Agreement
amends the terms of the previously entered into Financial Advisory
Services Agreement with BCM whereby BCM agreed that its fee in
connection with the Merger would be 1,325,776 shares of our common
stock, the vesting of which would be subject to the closing of the
Merger. BCM was issued shares as compensation for its advisory
services, which services included identifying the target business,
negotiation, diligence and other advisory work. Subsequently, BCM
distributed the shares it received to Messrs. Rapoport, Wagenheim,
Dominitz, Cannon, Kutcher, Eiswerth, Prince and Cugine, all of whom
are registered representatives BCM, as well as to Delavaco Holdings
Inc. and PowerOne Capital Markets Limited.

Messrs Rapoport and Wagenheim are Chairman and
Vice-Chairman, respectively, and affiliates of BCM, a registered
broker dealer. Each of Dominitz, Cannon, Kutcher, Eiswerth, Prince,
and Cugine are registered representatives and employees of BCM.
PowerOne Capital Markets Limited is not a registered broker-dealer
in the United States, but is an exempt market dealer in Canada.

We have been informed that at the time the shares
were acquired, none of such parties have agreements, plans or
arrangements to dispose of the shares.

Includes 15,000 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Richard Hochman has sole
voting or investment control over the 2003 Hochman Family LLC.

2)

Includes 4,998 shares of common stock issuable upon exercise of
warrants purchased in the Placement.

3)

Includes 20,000 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Ari Kluger has sole voting
or investment control over Adventure Ventures LLC.

4)

Includes 83,333 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Konrad Ackermann has sole
voting or investment control over Alpha Capital Anstalt.

5)

Includes 83,334 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Steve Palmer has sole
voting or investment control over AlphaNorth Asset Management.

6)

Includes 25,000 shares of common stock issuable upon exercise
of warrants purchased in the Placement.

7)

Includes 12,500 shares of common stock issuable upon exercise
of warrants purchased in the Placement.

8)

Includes 4,998 shares of common stock issuable upon exercise of
warrants purchased in the Placement.

9)

Includes 25,000 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Michael Brouser has sole
voting or investment control over Birchtree Capital.

10)

Includes 30,000 shares of common stock issuable upon exercise
of warrants purchased in the Placement.

11)

Includes 32,000 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Kim Ward has sole voting or
investment control over Butterfield Bank (Guernsey) Limited, as
Custodian of Glass Investments LP.

12)

Includes 66,667 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Michael A. Barth has sole
voting or investment control over Capela Overseas Ltd.

13)

Includes 4,167 shares of common stock issuable upon exercise of
warrants purchased in the Placement.

14)

Includes 7,500 shares of common stock issuable upon exercise of
warrants purchased in the Placement.

15)

Includes 70,000 shares of common stock issuable upon exercise
of warrants purchased in the Placement.

16)

Includes 4,997 shares of common stock issuable upon exercise of
warrants purchased in the Placement.

17)

Includes 33,334 shares of common stock issuable upon exercise
of warrants purchased in the Placement.

18)

Includes 166,667 shares of common stock issuable upon exercise
of warrants purchased in the Placement. David W. Freelove has sole
voting or investment control over Del Mar Master Fund, Ltd.

19)

Includes 4,998 shares of common stock issuable upon exercise of
warrants purchased in the Placement.

20)

Includes 333,334 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Rohit Sehgal has sole
voting or investment control over Investor Company ITF Dynamic
Power Hedge Fund.

21)

Includes 25,400 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Kim Ward has sole voting or
investment control over First Canadian Insurance.

22)

Includes 16,667 shares of common stock issuable upon exercise
of warrants purchased in the Placement. James Manley has sole
voting or investment control over Flash United Investments.

23)

Includes 58,333 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Frank Mersch has sole
voting or investment control over Front Street Investment
Management. Inc.

24)

Includes 10,000 shares of common stock issuable upon exercise
of warrants purchased in the Placement.

25)

Includes 16,700 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Kim Ward has sole voting or
investment control over Interward Capital Corporation.

26)

Includes 99,995 shares of common stock issuable upon exercise
of warrants purchased in the Placement. John H. Metzger has sole
voting or investment control over Invefin Ltd.

27)

Includes 50,000 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Jay G. Goldman has sole
voting or investment control over J. Goldman Master Fund, L.P.

28)

Includes 5,000 shares of common stock issuable upon exercise of
warrants purchased in the Placement.

29)

Includes 2,500 shares of common stock issuable upon exercise of
warrants purchased in the Placement.

30)

Includes 14,167 shares of common stock issuable upon exercise
of warrants purchased in the Placement.

31)

Includes 33,334 shares of common stock issuable upon exercise
of warrants purchased in the Placement.

32)

Includes 66,667 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Linda G. Williams and Helen
M. Carroll share voting or investment control over Kitchener
Investment Corp.

18

33)

Includes 7,500 shares of common stock issuable upon exercise of
warrants purchased in the Placement.

34)

Includes 17,000 shares of common stock issuable upon exercise
of warrants purchased in the Placement.

35)

Includes 37,497 shares of common stock issuable upon exercise
of warrants purchased in the Placement.

36)

Includes 35,000 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Bernard Lachenal has sole
voting or investment control over Magal Group S.A. Panama

37)

Includes 4,998 shares of common stock issuable upon exercise of
warrants purchased in the Placement.

38)

Includes 25,000 shares of common stock issuable upon exercise
of warrants purchased in the Placement.

39)

Includes 12,500 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Kim Ward has sole voting or
investment control over Millennium Insurance.

40)

Includes 5,000 shares of common stock issuable upon exercise of
warrants purchased in the Placement.

41)

Includes 7,500 shares of common stock issuable upon exercise of
warrants purchased in the Placement.

42)

Includes 6,000 shares of common stock issuable upon exercise of
warrants purchased in the Placement.

43)

Includes 50,000 shares of common stock issuable upon exercise
of warrants purchased in the Placement.

44)

Includes 17,500 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Dan Sternberg has sole
voting or investment control over Parkwood LP Fund.

45)

Includes 50,000 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Sheldon Inwentash has sole
voting or investment control over Pinetree Income Partnership.

46)

Includes 16,667 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Michael Ruscetta has sole
voting or investment control over RCM Special Situations.

47)

Includes 16,500 shares of common stock issuable upon exercise
of warrants purchased in the Placement.

48)

Includes 166,667 shares of common stock issuable upon exercise
of warrants purchased in the Placement. David Freelove has sole
voting or investment control over Rock Maple Concentrated Alpha
Trust.

49)

Includes 13,200 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Kim Ward has sole voting or
investment control over Rockhaven Holdings Ltd.

50)

Includes 10,000 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Ben Cubitt has sole voting
or investment control over Samara Fund Ltd.

51)

Includes 33,334 shares of common stock issuable
upon exercise of warrants purchased in the Placement. Charles W.
Chambers has sole voting or investment control over The Chambers
Family Living Trust Dated November 30, U/A 11/30/12

52)

Includes 4,998 shares of common stock issuable upon exercise of
warrants purchased in the Placement.

53)

Includes 16,667 shares of common stock issuable upon exercise
of warrants purchased in the Placement. Shawn Dym has sole voting
or investment control over York Plains Investment Corp.

PLAN OF
DISTRIBUTION

We are registering the shares of common stock issued
to the selling stockholders to permit the resale of these shares of
common stock by the selling stockholders from time to time after
the date of this prospectus. We will not receive any of the
proceeds from the sale by the selling stockholders of the shares of
common stock although we will receive proceeds upon exercise of
Warrants. We will bear all fees and expenses incident to our
obligation to register the shares of common stock.

The selling stockholders may sell all or a portion
of the shares of common stock beneficially owned by them and
offered hereby from time to time directly or through one or more
underwriters, broker-dealers or agents. If the shares of common
stock are sold through underwriters or broker-dealers, the selling
stockholders will be responsible for underwriting discounts or
commissions or agent's commissions. The shares of common stock may
be sold on any national securities exchange or quotation service on
which the securities may be listed or quoted at the time of sale,
in the over-the-counter market or in transactions otherwise than on
these exchanges or systems or in the over-the-counter market and in
one or more transactions at fixed prices, at prevailing market
prices at the time of the sale, at varying prices determined at the
time of sale, or at negotiated prices. These sales may be effected
in transactions, which may involve crosses or block transactions.
The selling stockholders may use any one or more of the following
methods when selling shares:

•

ordinary brokerage transactions
and transactions in which the broker-dealer solicits
buyers;

•

block trades in which the
broker-dealer will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to
facilitate the transaction;

•

purchases by a broker-dealer as
principal and resale by the broker-dealer for its
account;

•

an exchange distribution in
accordance with the rules of the applicable exchange;

•

privately negotiated
transactions;

•

settlement of short sales
entered into after the effective date of the registration statement
of which this prospectus is a part;

•

broker-dealers may agree with
the selling stockholders to sell a specified number of such shares
at a stipulated price per share;

•

through the writing or
settlement of options or other hedging transactions, whether such
options are listed on an options exchange or otherwise;

19

•

a combination of any such
methods of sale; and

•

any other method permitted
pursuant to applicable law.

The selling stockholders also may resell all or a
portion of the shares in open market transactions in reliance upon
Rule 144 under the Securities Act, as permitted by that rule,
or Section 4(a)(1) under the Securities Act, if available,
rather than under this prospectus, provided that they meet the
criteria and conform to the requirements of those provisions.

Broker-dealers engaged by the selling stockholders
may arrange for other broker-dealers to participate in sales. If
the selling stockholders effect such transactions by selling shares
of common stock to or through underwriters, broker-dealers or
agents, such underwriters, broker-dealers or agents may receive
commissions in the form of discounts, concessions or commissions
from the selling stockholders or commissions from buyers of the
shares of common stock for whom they may act as agent or to whom
they may sell as principal. Such commissions will be in amounts to
be negotiated, but, except as set forth in a supplement to this
Prospectus, in the case of an agency transaction will not be in
excess of a customary brokerage commission in compliance with FINRA
Rule 5110.

In connection with sales of the shares of common
stock or otherwise, the selling stockholders may enter into hedging
transactions with broker-dealers or other financial institutions,
which may in turn engage in short sales of the shares of common
stock in the course of hedging in positions they assume. The
selling stockholders may also sell shares of common stock short and
if such short sale shall take place after the date that this
registration statement is declared effective by the Commission, the
selling stockholders may deliver shares of common stock covered by
this prospectus to close out short positions and to return borrowed
shares in connection with such short sales. The selling
stockholders may also loan or pledge shares of common stock to
broker-dealers that in turn may sell such shares, to the extent
permitted by applicable law. The selling stockholders may also
enter into option or other transactions with broker-dealers or
other financial institutions or the creation of one or more
derivative securities which require the delivery to such
broker-dealer or other financial institution of shares offered by
this prospectus, which shares such broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented
or amended to reflect such transaction). Notwithstanding the
foregoing, the selling stockholders have been advised that they may
not use shares registered on this registration statement to cover
short sales of our common stock made prior to the date the
registration statement, of which this prospectus forms a part, has
been declared effective by the SEC. Similar to other purchase
transactions, a delivery of shares of common stock to cover
syndicate short sales or to stabilize the market price of our
common stock may have the effect of raising or maintaining the
market price of our common stock or preventing or mitigating a
decline in the market price of our common stock. As a result, the
price of the shares of our common stock may be higher than the
price that might otherwise exist in the open market.

The selling stockholders may, from time to time,
pledge or grant a security interest in some or all of the warrants
or shares of common stock owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to
time pursuant to this prospectus or any amendment to this
prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act of 1933, as amended, amending, if necessary,
the list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under this
prospectus. The selling stockholders also may transfer and donate
the shares of common stock in other circumstances in which case the
transferees, donees, pledgees or other successors in interest will
be the selling beneficial owners for purposes of this
prospectus.

The selling stockholders and any broker-dealer or
agents participating in the distribution of the shares of common
stock may be deemed to be "underwriters" within the meaning of
Section 2(a)(11) of the Securities Act in connection with such
sales. In such event, any commissions paid, or any discounts or
concessions allowed to, any such broker-dealer or agent and any
profit on the resale of the shares purchased by them may be deemed
to be underwriting commissions or discounts under the Securities
Act. Selling Stockholders who are "underwriters" within the meaning
of Section 2(a)(11) of the Securities Act will be subject to
the prospectus delivery requirements of the Securities Act and may
be subject to certain statutory liabilities of, including but not
limited to, Sections 11, 12 and 17 of the Securities Act and
Rule 10b-5 under the Securities Exchange Act of 1934, as
amended, or the Exchange Act.

Except for Messrs. Rapoport, Wagenheim, Dominitz,
Cannon, Kutcher, Eiswerth, Prince and Cugine, who are affiliates of
a registered broker, none of the selling stockholders is a
registered broker-dealer in the U.S. PowerOne Capital Markets
Limited is an exempt market dealer in Canada. Each selling
stockholder has informed the Company that it does not have any
written or oral agreement understanding, plans or arrangements
directly or indirectly, with any person to distribute the common
stock. Upon the Company being notified in writing by a selling
stockholder that any material arrangement has been entered into
with a broker-dealer for the sale of common stock through a block
trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to
this prospectus will be filed, if required, pursuant to Rule 424(b)
under the Securities Act, disclosing (i) the name of each such
selling stockholder and of the participating broker-dealer(s),
(ii) the number of shares involved, (iii) the price at
which such the shares of common stock were sold, (iv) the
commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this
prospectus, and (vi) other facts material to the transaction.
In no event shall any broker-dealer receive fees, commissions and
markups, which, in the aggregate, would exceed eight percent
(8%).

20

Under the securities laws of some states, the shares
of common stock may be sold in such states only through registered
or licensed brokers or dealers. In addition, in some states the
shares of common stock may not be sold unless such shares have been
registered or qualified for sale in such state or an exemption from
registration or qualification is available and is complied
with.

There can be no assurance that any selling
stockholder will sell any or all of the shares of common stock
registered pursuant to the registration statement of which this
prospectus forms a part.

Each selling stockholder and any other person
participating in such distribution will be subject to applicable
provisions of the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder, including, without
limitation, Regulation M of the Exchange Act, which may limit
the timing of purchases and sales of any of the shares of common
stock by the selling stockholder and any other participating
person. Regulation M may also restrict the ability of any
person engaged in the distribution of the shares of common stock to
engage in market-making activities with respect to the shares of
common stock. All of the foregoing may affect the marketability of
the shares of common stock and the ability of any person or entity
to engage in market-making activities with respect to the shares of
common stock.

We will pay all expenses of the registration of the
shares of common stock pursuant to the registration rights
agreement, including, without limitation, Securities and Exchange
Commission filing fees and expenses of compliance with state
securities or "blue sky"
laws; provided , however , that
each selling stockholder will pay all underwriting discounts and
selling commissions, if any, and any legal expenses incurred by it.
We will indemnify the selling stockholders against certain
liabilities, including some liabilities under the Securities Act,
in accordance with a registration rights agreement, or the selling
stockholders will be entitled to contribution. We may be
indemnified by the selling stockholders against civil liabilities,
including liabilities under the Securities Act, that may arise from
any written information furnished to us by the selling stockholders
specifically for use in this prospectus, in accordance with the
related registration rights agreements, or we may be entitled to
contribution.

Once sold under the registration statement, of which
this prospectus forms a part, the shares of common stock will be
freely tradable in the hands of persons other than our
affiliates.

Blue Sky Restrictions on Resale

If a selling stockholder wants to sell shares of our
common stock under this prospectus in the United States, the
selling stockholder will also need to comply with state securities
laws, also known as "Blue Sky laws," with regard to secondary
sales. As a result, holders may not resell their shares of common
stock in the United States without satisfying the applicable state
securities law or qualifying for an exemption therefrom, including
the exemptions provided under the U.S. National Securities Markets
Improvement Act of 1996. The broker for a selling stockholder will
be able to advise a selling stockholder as to which states our
common stock is exempt from registration with that state for
secondary sales.

Any person who purchases shares of our common stock
from a selling security holder under this prospectus who then wants
to sell such shares will also have to comply with Blue Sky laws
regarding secondary sales. These restrictions and potential costs
could be significant burdens to our stockholders seeking to effect
resales of our common stock within the United States.

21

DESCRIPTION OF
SECURITIES

The following is a summary of some of the terms of
our capital stock. Because it is only a summary, it does not
contain all of the information that may be important to you and is
qualified by reference to the relevant provisions of our
Certificate of Incorporation and our By-laws.

For a complete description you should refer to our
Certificate of Incorporation and our By-laws, which are exhibits to
this Filing.

General

As of April 22, 2016, we are authorized by our
Certificate of Incorporation to issue an aggregate of 100,000,000
shares of common stock, par value $0.001 per share. In addition, as
of April 22, 2016, we are authorized by our Certificate of
Incorporation to issue an aggregate of 15,000,000 shares of
preferred stock, par value $0.001 per share, 14,999,000 shares of
which have been designated Series B Convertible Preferred Stock. As
of April 22, 2016, there were 21,134,744 shares of the Company's
common stock issued and 20,741,572 shares of our common stock and
14,999,000 shares of our Series B Convertible Preferred Stock
outstanding.

Description of our Common Stock

The holders of our common stock are entitled to one
vote per share. Our Certificate of Incorporation does not provide
for cumulative voting. The holders of our common stock are entitled
to receive ratably such dividends, if any, as may be declared by
the Board of Directors out of legally available funds pari
passu with the holders of our Series B Convertible Preferred
Stock, on an as-converted to common stock basis.

Upon liquidation, dissolution or winding-up of our
company, the holders of our common stock and the holders of the
Series B Convertible Preferred Stock, based on the number of shares
of our common stock into which the Series B Convertible Preferred
Stock is convertible, are entitled to share ratably in all assets
of our company which are legally available for distribution, after
payment of or provision for all actual and potential liabilities
and the liquidation preference of any outstanding preferred stock
bearing such a preference, of which currently there are none. The
holders of our common stock have no preemptive, subscription,
redemption or conversion rights.

Description of Our Series B Convertible Preferred
Stock

Holders of our Series B Convertible Preferred Stock
are entitled at any time to convert their shares of Series B
Convertible Preferred Stock into an equal number of shares of our
common stock, subject to adjustment in the event of a stock
dividend, subdivision or combination of our common stock. Upon
liquidation, dissolution or winding-up of our company, the holders
of our common stock and the holders of the Series B Convertible
Preferred Stock, based on the number of shares of our common stock
into which the Series B Convertible Preferred Stock is convertible,
are entitled to share ratably in all assets of our company which
are legally available for distribution, after payment of or
provision for all actual and potential liabilities and the
liquidation preference of any outstanding preferred stock bearing
such a preference, of which currently there are none. In the event
of any liquidation, dissolution or winding up of the Company, our
assets legally available for distribution will be distributed
ratably among the holders of the Series B Convertible Preferred
Stock and our common stock, based on the number of shares of our
common stock into which the Series B Convertible Preferred Stock is
convertible. The holders of our Series B Convertible Preferred
Stock are entitled to receive ratably such dividends, if any, as
may be declared by the Board of Directors out of legally available
funds, pari passu on an as-converted to common stock basis
with the amount of such dividends to be distributed to the holders
of our common stock immediately prior to the declaration of such
dividend or distribution. The shares of Class B Convertible
Preferred Stock will vote together with our common stock on all
matters where stockholders are entitled to vote. The holders of
shares of Series B Convertible Preferred Stock are entitled to cast
an aggregate of 80.0% of the total votes that may be cast with
respect to any such matter, including the election of all
directors.

Registration Rights Agreements

On September 18, 2013, upon the closing of a private
placement (the "Placement") of newly issued shares of our common
stock and warrants, we entered into a registration rights agreement
(the "Offering Registration Rights Agreement") with the investors
participating in the Placement. Under the terms of the Offering
Registration Rights Agreement, we committed to file a registration
statement covering the resale of the common stock issued in the
Placement, as well as the common stock issuable on exercise of the
warrants, within 30 calendar days from the Closing Date of the
Placement (the "Filing Deadline") and to use reasonable best
efforts to cause the registration statement to become effective no
later than the earlier of: (i) the 90th calendar day following the
Closing Date, provided , that, if the Commission reviews and has
written comments to the filed registration statement, then such
date shall be the 180th calendar day following the Closing Date,
and (ii) the 5th trading day following the date on which we are
notified by the Commission that the registration statement will not
be reviewed or is no longer subject to further review and comments
and the effectiveness of the registration statement may be
accelerated (the "Effective Deadline").

22

In the Offering Registration Rights Agreement, we
agreed to use reasonable best efforts to maintain the effectiveness
of the registration statement until the earlier of (i) such time
when all of the shares of common stock covered by such registration
statement have been publicly sold by the holders and (ii) the date
on which all of such shares are (A) sold pursuant to an effective
registration statement; (B) are sold pursuant to Rule 144 under
circumstances in which any legend borne by such shares are removed;
or (C) such shares would be saleable pursuant to Rule 144 without
restrictions on volume or manner of sale (which shall be no earlier
than one (1) year from the Closing Date) (the "Effectiveness
Period"). If (i) the registration statement is not filed on or
prior to its Filing Deadline, (ii) we fail to have the registration
statement declared effective prior to the Effective Deadline, or
(iii) after the Effective Deadline, such registration statement
ceases to remain continuously effective for more than 30
consecutive calendar days or more than an aggregate of 60 calendar
days during any 12-month period (subject to certain grace periods),
we will be liable to each holder, as partial liquidated damages, to
pay an amount, payable monthly, equal to 1.0% of the aggregate
purchase price paid by such holder in the Placement for the number
of shares of unregistered shares registrable under the Offering
Registration Rights Agreement then held by such holder. The maximum
aggregate liquidated damages payable to a holder under the Offering
Registration Rights Agreement is 10.0% of the aggregate amount of
such holder's investment in the Placement, and certain other
limitations apply to the accrual of liquidated damages under the
Offering Registration Rights Agreement. The liquidated damages
pursuant to the terms of the Offering Registration Rights Agreement
apply on a daily pro rata basis for any portion of a month prior to
the cure of the event resulting in the incurrence of liquidated
damages.

The Secondary Registration Rights Agreement contains
terms and conditions substantially similar to the Offering
Registration Rights Agreement. The registration statement required
by the Secondary Registration Rights Agreement was declared
effective on June 3, 2014.

We will pay all registration expenses, other than
underwriting discounts and commissions, related to the Offering
Registration Rights Agreement and the Secondary Registration Rights
Agreement. Each of the Offering Registration Rights Agreement and
the Secondary Registration Rights Agreement contain customary
cross-indemnification provisions pursuant to which we will
indemnify the selling stockholders in the event of material
misstatements or omissions in the resale registration statement
attributable to us, and they will indemnify us for material
misstatements or omissions attributable to them. We will be
indemnified for certain penalty payment obligations which may
become due under the Secondary Registration Rights Agreement by
Walker Digital pursuant to a Registration Rights Indemnification
Agreement dated as of February 10, 2014.

Anti-Takeover Effects of Delaware Law and Our
Certificate of Incorporation and By-laws

Certain provisions of Delaware law, our Certificate
of Incorporation and our By-laws contain provisions that could have
the effect of delaying, deferring or discouraging another party
from acquiring control of us.

Certificate of Incorporation and By-laws

Our Certificate of Incorporation and By-laws contain
provisions that may make the acquisition of our company more
difficult without the approval of our Board, including, but not
limited to, the following:

·

we have authorized undesignated preferred
stock, the terms of which may be established and shares of which
may be issued without stockholder approval;

·

stockholders may only remove directors for
cause;

·

at least 75% of all votes entitled to be cast
at any annual election of directors must vote in favor of the
amendment of any of our By-laws, although our By-laws may be
amended at any time by a majority vote of the Board of
Directors;

·

vacancies on the Board occurring between
meetings of stockholders may be filled only by the
Directors;

·

the Directors can expand the size of the
Board by a majority vote of the Directors;

·

we require that actions by written consent of
stockholders be reviewed and certified by an inspector of
elections; and

·

we require advance notice for stockholder
proposals.

23

These provisions could also discourage proxy
contests and make it more difficult for you and other stockholders
to elect directors of your choosing and cause us to take other
corporate actions that you desire. The anti-takeover defenses in
our Certificate of Incorporation and By-laws could discourage,
delay or prevent a transaction involving a change in control of our
company. These deterrents could adversely affect the price of our
common stock and make it difficult to remove or replace members of
our Board or management.

Delaware Anti-Takeover Statute

We may become subject to the provisions of Section
203 of the Delaware General Corporation Law ("Section 203")
regulating corporate takeovers. In general, Section 203 prohibits a
publicly-held Delaware corporation from engaging, under certain
circumstances, in a business combination with an interested
stockholder for a period of three years following the date the
person became an interested stockholder unless:

·

prior to the date of the
transaction, the board of directors of the corporation approved
either the business combination or the transaction which resulted
in the stockholder becoming an interested stockholder;

·

upon completion of the
transaction that resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the
transaction commenced, excluding for purposes of determining the
voting stock outstanding, but not the outstanding voting stock
owned by the interested stockholder, (1) shares owned by persons
who are directors and also officers and (2) shares owned by
employee stock plans in which employee participants do not have the
right to determine confidentially whether shares held subject to
the plan will be tendered in a tender or exchange offer;
or

·

at or subsequent to the date of
the transaction, the business combination is approved by the board
of directors of the corporation and authorized at an annual or
special meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested stockholder.

Generally, a business combination includes a merger,
asset or stock sale, or other transaction resulting in a financial
benefit to the interested stockholder. An interested stockholder is
a person who, together with affiliates and associates, owns or,
within three years prior to the determination of interested
stockholder status, did own 15% or more of a corporation's
outstanding voting stock. Section 203 may have an anti-takeover
effect with respect to transactions our Board of Directors does not
approve in advance. Section 203 may also discourage business
combinations or other attempts that might result in a premium over
the market price for the shares of common stock held by our
stockholders.

DESCRIPTION OF
BUSINESS

Overview

Walker Innovation Inc. (formerly known as Patent
Properties, Inc.) has two distinct lines of businesses: we develop
and commercialize our unique portfolio of intellectual property
assets through our licensing and enforcement operations
(''Licensing and Enforcement'') and, more recently, in early 2015
we launched the innovation business, which previously consisted of
Haystack IQTM (formerly known as ''The United States
Patent UtilityTM'') (''Haystack IQ'') and currently
includes custom business innovation services pursuant to which the
Company seeks to perform custom innovation work for large companies
seeking to prototype and commercialize new businesses and new
business methods, referred to as the Company's ''Innovation''
business. The Company is led by entrepreneur and inventor Jay
Walker, who is best known as the founder of Priceline.com and has
twice been named by TIME magazine as ''one of the top 50 business
leaders of the digital age.'' Mr. Walker currently ranks as the
world's 11th most patented living individual, based on U.S. patent
issuances according to Wikipedia.

Recent Transactions

The Company announced on March 31, 2016 that it
ceased operations of its Haystack IQ product.

On December 4, 2015, the Company entered into a
Shared Services Agreement (the ''Upside Holdings Services
Agreement'') with The Upside Commerce Group, LLC (formerly known as
the Flexible Travel Company, LLC) (''Upside Holdings''), a company
controlled by Mr. Walker and affiliated with Walker Digital, the
Company's controlling stockholder, regarding the provision of
executive management, marketing, legal and financial consulting
services. There are no set deliverables contemplated by the Upside
Holdings Services Agreement, although the hourly rates the Company
changes Upside Holdings (approximately equal to the Company's cost)
are specified. In connection with the Upside Holdings Services
Agreement, the Company was granted a warrant to purchase limited
liability interests at a price of $0.06 per Class A Common Share in
Upside Holdings. The warrant was issued to the Company by Mr.
Walker, who currently beneficially owns approximately 76% of the
aggregate outstanding limited liability company interests of Upside
Holdings.

24

Innovation Business

The Company focuses on fostering and creating
systems and tools to help companies innovate more effectively and
efficiently through custom innovation projects for large
companies.

Custom Innovation

The Company seeks to provide consulting services and
software development to large companies in connection with
prototyping projects as well as the development of customized
innovative ways to serve their customers and grow their market
share. The Company may be engaged by the customer directly, or work
may be subcontracted to it by its controlling stockholder, a
related party, Walker Digital. The Company is currently performing
custom innovation services for Walker Digital pursuant to a work
order for a prototype project involving a Fortune 500 insurance
company that previously retained Walker Digital to design and
develop viable new business models. The business prototype to be
developed has an approved budget of approximately $3.0 million to
be funded through late 2016 as services are provided and
operational milestones are achieved.

Competition

With respect to our Innovation business, there are a
number of intermediaries that help companies understand the risks
and opportunities presented by the proliferation of new materials,
technologies and methods, including technology scouts, expert
networks and a variety of professional service firms. However, the
vast majority of these services focus on the very largest
companies, which can afford expensive software tools and custom
analyses by human experts.

Licensing and Enforcement

All of our intellectual property assets were created
with the goal of solving business problems, with the intent to
achieve commercial status. However, it is our belief that certain
of our inventions have become part of the commercial activities of
other businesses without having been licensed, depriving us of
financial value. As a result, focused patent enforcement activities
are a component of our business strategy. During the past three
fiscal years the Company has filed 21 patent infringement lawsuits
(including three counterclaims in declaratory judgment actions)
against 25 defendants involving 8 patents in suit. These
enforcement efforts have resulted in over $6.8 million in gross
revenue from settlement income. There is currently 1 litigation
matter in the US District Courts in Delaware. We may expand our
enforcement activities to other unlicensed users of those patents
that have previously been asserted in litigation and may expand
such activities to other patents in our portfolio. Our litigations
are disclosed below under- Legal Proceedings.

Intellectual Property/Patent Portfolio Overview

Our patent portfolio currently consists of
approximately 400 granted patents, as well as over 45 pending
patent applications. Our patents describe inventions in areas such
as authentication techniques, internet search, social networking
and advertising and online transactions, among many others. They
are relevant to a broad array of large and growing industries
including data management, e-commerce, electronic and computer
hardware, social networking and internet services, financial
services, entertainment and video gaming, online education,
manufacturing, security and state lotteries.

25

Furthermore, to optimize the quality of our
intellectual property, we retain well qualified patent attorneys to
work on every stage of the patent procurement process, from
ideation, through drafting, prosecution and appeals. Potentially,
there may be valuable unasserted claims within the portfolio. We
may file for additional patent protection based on some of our
existing patents and patent applications when appropriate. In
addition, all of our employees enter into confidentiality
agreements with us, which includes a provision governing the
assignment of inventions.

Competition

With respect to our Licensing and Enforcement
operations, we expect to encounter competition from others seeking
to license or sell intellectual property. This includes an increase
in the number of competitors seeking to license or sell similar
patents and technologies. Other companies may develop competing
technologies and offerings that may provide better or less
expensive alternatives to our patented technologies that we may
license or sell. Many potential competitors may have significantly
greater resources than we do. Technological advances or entirely
different approaches developed by one or more of our competitors
could render certain of the technologies owned and services to be
provided obsolete and/or uneconomical.

Corporate History

In 2010, we sold our four previous operating units
and determined that, following those transactions, we were a
''shell company'' as defined in Rule 12b-2 of the Exchange Act. As
a result of the Merger described below, we ceased to be a shell
company.

In connection with an Agreement and Plan of Merger
dated as of July 11, 2013, Walker Holdings was formed as a limited
liability company in the State of Delaware on June 3, 2013.
Immediately prior to the closing of the related merger (the
''Merger'') on September 18, 2013 (the ''Closing Date''), Walker
Digital, then the sole member of Walker Holdings, contributed
Walker Licensing, a segment of Walker Digital, to Walker Holdings.
Upon the closing of the Merger, our newly formed, wholly-owned
subsidiary (''Merger Sub'') merged with and into Walker Holdings,
and Walker Holdings became our wholly-owned subsidiary. Immediately
following the Merger, the business of Walker Holdings became the
business of the Company. Subsequent to the Closing Date, Walker
Holdings changed its name to Inventor Holdings, LLC (''IH LLC'').
On July 31, 2015, the Company filed a Certificate of Amendment of
its Certificate of Incorporation with the State of Delaware,
pursuant to which the Company was renamed Walker Innovation
Inc.

All of the patents we own through IH LLC f/k/a
Walker Holdings were developed internally by Walker Digital, with
Jay Walker as the lead inventor named on almost all patents issued.
All improvements to these assets, together with the intellectual
property associated with the predecessor to Haystack IQ, have been
assigned pursuant to an Invention Assignment Agreement with Mr.
Walker. While the terms of the Invention Assignment Agreement do
not entitle us to any other intellectual property Mr. Walker may
develop in the future, in view of his significant equity position
in the Company and the Company's platform for the protection of the
intellectual property it holds, Mr. Walker may nevertheless
determine to develop and commercialize intellectual property
through the Company. The terms and conditions of any such
transaction would be negotiated between Mr. Walker and our Audit
Committee at the time of such determination.

DESCRIPTION OF
PROPERTY

Our Connecticut office, which serves as our
corporate headquarters, is located at Two High Ridge Park,
Stamford, Connecticut. We lease space pursuant to a Shared Services
Agreement with Walker Digital. The Walker Digital lease will expire
in September of 2016. The annual rent for the office space occupied
by us is approximately $215,000. We believe that our existing
facilities are adequate to accommodate our current business
needs.

LEGAL
PROCEEDINGS

Below is a brief description of material pending
legal proceedings, other than ordinary routine litigation
incidental to the business, to which we or any of our subsidiaries
is a party or of which any of their property is the subject.

On April 11, 2011, Walker Digital, LLC (''Walker
Digital'') filed suit alleging infringement of one or more claims
of U.S. Patent 6,199,014 in the United States District Court for
the District of Delaware, Docket No. 11-309. The complaint was
filed against Apple, Inc., BMW of North America LLC, Google, Inc.,
Mapquest, Inc., Mio Technology USA, Tom Tom, Inc., Telenav, Inc.,
Blusens Technology S.C., NDrive, Inc., Navman Wireless Holdings LP,
Microsoft Corporation and Samsung Electronics. The complaint seeks
damages and a permanent injunction. Following early stages of
discovery, Walker Digital voluntarily dismissed BMW of North
America LLC, Mapquest, Inc., Mio Technology USA, Tom Tom, Inc.,
TeleNav, Inc., Blusens Technology S.C., Ndrive, Inc., and Navman
Wireless Holdings LP, without prejudice. Apple, Inc. entered into a
license agreement with Walker Digital on June 27, 2011 and was
subsequently dismissed from this suit. Following claim
construction, Walker Digital voluntarily dismissed Microsoft
Corporation. The United States Patent Trial and Appeal Board issued
a ruling on November 28, 2014, invalidating the patent and the suit
was subsequently dismissed.

26

On April 11, 2011, Walker Digital filed suit
alleging infringement of one or more claims of U.S. Patent
7,801,802 in the United States District Court for the District of
Delaware, Docket No. 11-311. A complaint was filed against Google,
Inc., Yahoo! Inc., and Microsoft Corporation. The complaint seeks
damages and a permanent injunction. Yahoo! Inc. entered into a
license agreement with Walker Digital on July 11, 2012 and the case
was subsequently dismissed against Yahoo! Inc. On July 25, 2013,
the District Court entered a stipulated judgment of
non-infringement following a claim construction order. On November
6, 2014, the United States Court of Appeals for the Federal Circuit
affirmed the judgment of non-infringement and the suit was
subsequently dismissed. On February 7, 2015, following dismissal,
Google, Inc. moved to renew their motion in pursuit of sanctions
and fees. The District Court held a hearing on the motion on June
1, 2015. On September 4, 2015, the District Court denied Google's
renewed motion for sanctions and fees and the suit was subsequently
dismissed.

On April 11, 2011 Walker Digital filed suit alleging
infringement of one or more claims of U.S. Patents 5,884,272 and
5,884,270 in the United States District Court for the District of
Delaware, Docket No. 11-318. A complaint was filed against MySpace,
Inc., News Corporation, Friendster, Inc., LinkedIn Corporation,
Buckaroo Acquisition Corporation, Criterion Capital Partners LP,
Google, Inc., Tagged, Inc., and Facebook, Inc. The complaint seeks
damages and a permanent injunction. Walker Digital entered into a
settlement agreement with Facebook, Inc. on July 12, 2011, Tagged,
Inc. on June 22, 2012, MySpace, Inc. on December 9, 2011,
Friendster, Inc. on March 12, 2012 and LinkedIn, Inc. on May 20,
2013. Walker Digital dismissed each settling party from this suit.
The United States District Court for the District of Delaware
issued a ruling on September 3, 2014, invalidating the patent and
the suit was subsequently dismissed. On March 29, 2016, the
District Court granted Google's motion for fees in the amount of
$75,525.15.

On April 11, 2011, Walker Digital filed suit
alleging infringement of one or more claims of U.S. Patents
6,138,105 and 6,601,036 in the United States District Court for the
District of Delaware, Docket No. 11-320. A complaint was filed
against American Airlines, Inc., Amazon.com, Inc., Best Buy Co.,
Inc., Bestbuy.com LLC, BBY Solutions, Inc., Dell, Inc., Delta
Airlines, Inc., Expedia, Inc., Hewlett-Packard Company, Sony
Electronics, Inc., and Wal-Mart Stores, Inc. The complaint seeks
damages and a permanent injunction. Walker Digital LLC entered into
a settlement agreement with Dell, Inc. on July 12, 2011 and Dell,
Inc. was subsequently dismissed. After further review of the
alleged infringing product, Walker Digital voluntarily dismissed
Best Buy Co., Inc., BBY Solutions, Inc. and Sony Electronics, Inc.
Subsequently, Inventor Holdings, Inc. (''IH, LLC''), as successor
to Walker Digital, agreed to dismiss American Airlines, Inc.
Wal-Mart Stores, Inc. entered into a settlement agreement with IH,
LLC, on December 22, 2014 and Wal-Mart Stores, Inc. was
subsequently dismissed. IH, LLC voluntarily dismissed the remaining
defendants Amazon.com, Inc. BestBuy.Com, LLC, Delta Airlines, Inc.,
Expedia, Inc., and Hewlett-Packard Company on February 23, 2015 and
the suit was dismissed.

On April 12, 2011, Walker Digital Filed suit
alleging infringement of one or more claims of U.S. Patent
7,924,323 in the United States District Court for the District of
Delaware, Docket No. 11-326. The complaint was filed against Canon
U.S.A, Inc., Casio America, Inc., Eastman Kodak Co., Eye-Fi, Inc.,
Fujifilm U.S.A., Inc., Nikon, Inc., Olympus America, Inc., Pentax
of America, Inc., Ricoh Americas Corporation, Samsung Electronics
America, Sanyo North America Corporation, Sony Corporation of
America and Sony Electronics, Inc. The complaint seeks damages and
a permanent injunction. Walker Digital entered into a settlement
agreement with Nikon, Inc. on December 19, 2011, Samsung
Electronics America on June 14, 2012 and Canon U.S.A. Inc., on
March 5, 2013. Walker Digital dismissed each settling party from
this suit. On December 29, 2014, Sony Electronics, Inc. filed a
request for Ex Parte Reexamination before the United States Patent
and Trademark Office of US Patent 7,924,323. On August 12, 2015, a
final rejection of all challenged claims in the Ex Parte
Reexamination was received from the United States Patent and
Trademark Office.

On April 22, 2011, Walker Digital filed suit
alleging infringement of one or more claims of U.S. Patent
5,970,470 in the United States District Court for the District of
Delaware, Docket No. 11-362. The complaint was filed against
Amazon.com, Inc. The complaint seeks damages and a permanent
injunction. IH, LLC, as successor to Walker Digital, dismissed the
suit against Amazon.com, Inc. effective March 26, 2015.

On April 25, 2011, Walker Digital filed suit
alleging infringement of one or more claims of U.S. Patents
6,224,486 and 6,425,828 in the United States District Court for the
District of Delaware, Docket No. 11-368. The complaint was filed
against 2K Games, Inc., 2K Sports, Inc., Capcom Entertainment,
Inc., Capcom U.S.A. Inc., Electronics Arts, Inc., Konami Digital
Entertainment, Inc., Microsoft Corporation, Rockstar Games, Inc.,
Sega of America Inc., Sony Computer Entertainment America LLC,
Square Enix of America Holdings LLC, Square Enix, Inc., Take-Two
Interactive Software, Inc., THQ Inc., and Ubisoft, Inc. The
complaint seeks damages and a permanent injunction. Walker Digital
entered into a settlement agreement with Electronic Arts, Inc. on
July 24, 2012, Take-Two Interactive Softtware, Inc., 1K Games,
Inc., 2K Sports, Inc. and Rockstar Games, Inc. on August 2, 2012
and Konami Digital Entertainment, Inc. and Square Enix, Inc. on
December 28, 2012, UBisoft, Inc., Sega of America, Inc. and Capcom
U.S.A. on September 1, 2013 and Microsoft Corporation on December
16, 2014. Walker Digital dismissed each settling party from this
suit. On July 3, 2012, Sony Computer Entertainment America LLC
filed a Petition with the United States Patent and Trademark Office
before the Patent Trial and Appeal Board for an Inter Partes Review
of one or more claims of US Patent 6,425,828. On September 12,
2012, Sony Computer Entertainment America LLC filed a Petition with
the United States Patent and Trademark Office before the Patent
Trial and Appeal Board for an Inter Partes Review of one or more
claims of US Patent 6,224,486. On July 30 and August 7, 2012,
respectively, Sony Computer Entertainment America LLC filed
requests for Inter Partes Reexamination of US Patents 6,425,828 and
6,224,486. The Inter Partes Reexaminations resulted in the
cancellation of all challenged claims. The district court case was
dismissed as to all defendants on May 7, 2015.

On April 26, 2011, Walker Digital filed suit
alleging infringement of one or more claims of U.S. Patent
7,933,893 in the United States District Court for the District of
Delaware, Docket No. 11-369. The complaint was filed against
Google, Inc., Microsoft Corporation, Amazon.com, Inc. and Vibrant
Media. The complaint seeks damages and a permanent injunction. On
September 14, 2012, Google, Inc. filed a Petition with the United
States Patent and Trademark Office before the Patent Trial and
Appeal Board for an Inter Partes Review of one or more claims of US
Patent 7,933,893. Walker Digital voluntarily dismissed the
defendants and the case was dismissed on September 3, 2015. The
Reexamination has also been dismissed.

On August 8, 2011, Walker Digital filed suit
alleging infringement of one or more claims of U.S. Patents
6,110,041 and 6,293,866 in the United States District Court for the
District of Delaware, Docket No. 11-696. The complaint was filed
against Microsoft Corporation, Sony Computer Entertainment America
LLC, Sony Network Entertainment America, Inc., and Sony Network
Entertainment International LLC. The complaint seeks damages and a
permanent injunction. Walker Digital voluntarily dismissed Sony
Network Entertainment America, Inc. The United States Patent Trial
and Appeal Board issued a ruling on December 3, 2014 invalidating
the patent and the suit was subsequently dismissed.

On October 18, 2011, Walker Digital filed suit
alleging infringement of one or more claims of U.S. Patent
8,041,711 in the United States District Court for the District of
Delaware, Docket No. 11-989. The complaint was filed against
Google, Inc. The complaint seeks damages and a permanent
injunction. On September 14, 2012, Google filed a request for Inter
Partes Reexamination of U.S. Patent No. 8,041,711 before the U.S.
Patent and Trademark Office. All claims of U.S. Patent 8,041,711
were canceled by the United States Patent and Trademark Office and
the suit was subsequently dismissed.

On October 18, 2011, Walker Digital filed suit
alleging infringement of one or more claims of U.S. Patent
8,041,711 in the United States District Court for the District of
Delaware, Docket No. 11-990. The complaint was filed against
Amazon.com, Inc. The complaint seeks damages and a permanent
injunction. On September 14, 2012, Google filed a request for Inter
Partes Reexamination of U.S. Patent No. 8,041,711 before the United
States Patent and Trademark Office. All claims of U.S. Patent
8,041,711 were canceled by the U.S. Patent and Trademark Office and
the suit was subsequently dismissed.

On October 18, 2011, Walker Digital filed suit
alleging infringement of one or more claims of U.S. Patent
8,041,711 in the United States District Court for the District of
Delaware, Docket No. 11-991. The complaint was filed against
Microsoft Corporation. The complaint seeks damages and a permanent
injunction. Microsoft Corporation entered into a settlement
agreement with IH, LLC, as successor to Walker Digital, on December
16, 2014, and the suit was subsequently dismissed.

28

On October 18, 2011, Walker Digital filed suit
alleging infringement by Vibrant Media, Inc. of one or more claims
of U.S. Patent 8,041,711 in the United States District Court for
the District of Delaware, Docket No. 11-993. The complaint seeks
damages and a permanent injunction. On September 14, 2012, Google
filed a request for Inter Partes Reexamination of U.S. Patent No.
8,041,711 before the U.S. Patent and Trademark Office. All claims
of U.S. Patent 8,041,711 were canceled by the United States Patent
and Trademark Office and the suit was subsequently dismissed.

On January 16, 2013, Walker Digital filed suit
alleging infringement by Wal-Mart Stores, Inc. of one or more
claims of U.S. Patent 6,381,582 in the United States District Court
for the District of Delaware, Docket No. 13-096. Wal-Mart Stores,
Inc. entered into a settlement agreement with IH, LLC, as successor
to Walker Digital, on December 22, 2014 and the suit was
subsequently dismissed.

On January 16, 2013, Walker Digital filed suit
alleging infringement by Toys ''R'' Us, Inc., of one or more claims
of U.S. Patent 6,381,582 in the United States District Court for
the District of Delaware, Docket No. 13-097. IH, LLC, as successor
to Walker Digital, voluntarily dismissed Toys ''R'' Us, Inc.

On January 16, 2013, Walker Digital filed suit
alleging infringement by 7-Eleven, Inc., Amazon.com, Inc., and
PayNearMe, Inc., of one or more claims of U.S. Patent 6,381,582 in
the United States District Court for the District of Delaware,
Docket No. 13-098. PayNearMe, Inc. entered into a settlement
agreement with IH, LLC, as successor to Walker Digital, on August
22, 2014 and the suit was subsequently dismissed.

On February 12, 2014, IH LLC filed suit alleging
infringement by K-Mart Corporation of one or more claims of U.S.
Patent 6,381,582 in the United States District Court for the
District of Delaware, Docket 14-185. The complaint seeks damages
for past, present and future infringement. K-Mart Corporation
entered into a settlement agreement with IH, LLC, as successor in
interest to Walker Digital, on June 10, 2015 and the suit was
subsequently dismissed.

On February 12, 2014, IH LLC filed suit alleging
infringement by Google, Inc. of one or more claims of U.S. Patent
8,558,921 in the United States District Court for the District of
Delaware, Docket 14-186. The complaint seeks damages for past,
present and future infringement. On February 11, 2015, Google, Inc.
filed a Petition with the United States Patent and Trademark Office
before the Patent Trial and Appeal Board for an Inter Partes Review
(''Google IPR'') of one or more claims of US Patent 8,558,921. On
October 16, 2015, Google entered into a settlement agreement with
IH, LLC and the suit and Google IPR were subsequently
dismissed.

On April 8, 2014, IH LLC filed suit alleging
infringement by Bed Bath & Beyond of one or more claims of U.S.
Patent 6,381,582 in the United States District Court for the
District of Delaware, Docket 14-448. The complaint seeks damages
for past, present and future infringement. On August 21, 2015, the
District Court granted a Motion for Judgment on the Pleadings by
Bed Bath & Beyond, finding US Patent No. 6,381,582 Invalid
under 35 U.S.C. Section 101. IH LLC subsequently filed an appeal
with the Federal Circuit challenging the District Court's Section
101 Ruling. On April 7, 2016, the Federal Circuit affirmed the
District Court's ruling invalidating the patent. Also on April 7,
2016, Bed Bath & Beyond indicated it intends to seek its
costs of approximately $22,000 for both the District Court and
Federal Circuit proceedings from IH LLC.

On May 14, 2014, Certified Measurement, LLC, a
subsidiary of IH LLC, filed suit alleging infringement by
Centerpoint Energy Houston Electric, LLC and Itron, Inc. of one or
more claims of US Patents 5,828,751, 6,282,648, 6,289,453 and
8,549,310 in the United States District Court for the Eastern
District of Texas, Docket 14-627. The complaint seeks an injunction
and damages for past, present and future infringement. On January
15, 2015, Itron, Inc. filed a Petition with the United States
Patent and Trademark Office before the Patent Trial and Appeal
Board for an Inter Partes Review (''Itron IPRs'') of one or more
claims of US Patents 5,828,751, 6,282,648, 6,289,453, and
8,549,310. On July 9, 2015, the Patent Trial and Appeal Board
authorized institution of an inter parties review of all challenged
claims of US Patents 5,828,751, 6,282,648, 6,289,453, and
8,549,310. This matter was stayed pending resolution of the Itron
IPRs. On January 27, 2016, Itron, Inc. entered into a settlement
agreement with Certified Measurement, LLC and IH, LLC and the suit
and Itron IPRs were subsequently dismissed.

On June 6, 2014, IH LLC filed suit alleging
infringement by Microsoft Corporation of one or more claims of U.S.
Patent 8,558,921 in the United States District Court for the
District of Delaware, Docket 14-720. The complaint seeks damages
for past, present and future infringement. Microsoft Corporation
entered into a settlement agreement with IH, LLC on December 16,
2014 and the suit was subsequently dismissed.

On June 11, 2014, IH LLC filed suit alleging
infringement by Sears, Roebuck and Co. and Sears Holdings
Management Corporation of one or more claims of U.S. Patent
6,381,582 in the United States District Court for the District of
Delaware, Docket 14-730. The complaint seeks damages for past,
present and future infringement. Sears, Roebuck and Co. and Sears
Holdings Management Corporation entered into a settlement agreement
with IH, LLC on December 16, 2014 and the suit was subsequently
dismissed.

29

On June 19, 2014, IH LLC filed suit alleging
infringement by Sam's West, Inc. d/b/a Sam's Club of one or more
claims of U.S. Patent 5,970,470 in the United States District Court
for the District of Delaware, Docket 14-783. The complaint seeks
damages for past, present and future infringement. Sam's West, Inc.
d/b/a Sam's Club entered into a settlement agreement with IH, LLC
on December 22, 2014 and the suit was subsequently dismissed.

On June 19, 2014, IH LLC filed suit alleging
infringement by Target Corporation of one or more claims of U.S.
Patent 5,970,470 in the United States District Court for the
District of Delaware, Docket 14-784. The complaint seeks damages
for past, present and future infringement. Target Corporation and
IH, LLC mutually agreed to dismiss the suit.

On July 25, 2014, Sensus USA, Inc. filed a complaint
for declaratory judgment of non-infringement of U.S. Patents
5,828,751, 6,282,648, 6,289,453 and 8,549,310 against Certified
Measurement LLC, a subsidiary of IH LLC, in the United States
District Court for the District of Connecticut, Docket 14-069. On
August 19, 2014, Certified Measurement LLC filed a counterclaim
alleging infringement of one or more claims of such patents seeking
an injunction and damages for infringement. From May 22, 2015
through June 19, 2015, Sensus USA, Inc. filed Petitions with the
United States Patent and Trademark Office for Inter Partes Review
(''Sensus IPRs'') of one or more claims of U.S. Patents 5,828,751,
6,282,648, 6,289,453 and 8,549,310. In December 2015, those
Petitions were denied as to certain claims and granted as to
certain claims. Also in December 2015 Certified Measurement LLC
entered into a settlement agreement with Sensus USA, Inc. and the
suit and pending Sensus IPRs were subsequently dismissed. On August
19, 2014, IH LLC filed suit alleging infringement by Gameloft, Inc.
of one or more claims of U.S. Patent 8,784,198 in the United States
District Court for the District of Delaware, Docket 14-067. The
complaint seeks damages for past, present and future infringement.
On August 19, 2015, Gameloft filed a Petition for Inter Parties
Review of one or more claims of US Patent No. 8,784,198 with the
USPTO (''Gameloft IPR''). On September 30, 2015, the District Court
granted a motion to dismiss for invalidity of the '198 patent. The
case was dismissed on October 26, 2015 and the Gameloft IPR has
been dismissed.

On August 19, 2014, IH LLC filed suit alleging
infringement by GluMobile of one or more claims of U.S. Patent
8,784,198 in the United States District Court for the District of
Delaware, Docket 14-068. The complaint seeks damages for past,
present and future infringement. On September 30, 2015, the
District Court granted a motion to dismiss for invalidity of U.S.
Patent 8,784,198. On October 10, 2014, the parties filed a Joint
Stipulation to Enter Final Judgment. The case was dismissed on
October 26, 2015.

On August 19, 2014, IH LLC filed suit alleging
infringement by Kabam, Inc. of one or more claims of U.S. Patent
8,784,198 in the United States District Court for the District of
Delaware, Docket 14-069. The complaint seeks damages for past,
present and future infringement. Kabam, Inc. entered into a
settlement agreement with IH, LLC on October 24, 2014 and the suit
was subsequently dismissed.

On August 19, 2014, IH LLC filed suit alleging
infringement by King.com, Inc. of one or more claims of U.S. Patent
8,784,198 in the United States District Court for the District of
Delaware, Docket 14-070. The complaint seeks damages for past,
present and future infringement. On September 30, 2015, the
District Court granted a motion to dismiss for invalidity of U.S.
Patent 8,784,198. The case was dismissed on October 26, 2015.

On August 19, 2014, IH LLC filed suit alleging
infringement by NGMoco LLC of one or more claims of U.S. Patent
8,784,198 in the United States District Court for the District of
Delaware, Docket 14-071. The complaint seeks damages for past,
present and future infringement. On September 30, 2015, the
District Court granted a motion to dismiss for invalidity of U.S.
Patent 8,784,198. The case was dismissed on October 26, 2015.

On August 19, 2014, IH LLC filed suit alleging
infringement by Rovio Entertainment Company of one or more claims
of U.S. Patent 8,784,198 in the United States District Court for
the District of Delaware, Docket 14-072. The complaint seeks
damages for past, present and future infringement. On September 30,
2015, the District Court granted a motion to dismiss for invalidity
of U.S. Patent 8,784,198. The case was dismissed on October 26,
2015.

On August 19, 2014, IH LLC filed suit alleging
infringement by Supercell, Inc. of one or more claims of U.S.
Patent 8,784,198 in the United States District Court for the
District of Delaware, Docket 14-073. The complaint seeks damages
for past, present and future infringement. On September 30, 2015,
the District Court granted a motion to dismiss for invalidity of
U.S. Patent 8,784,198. The case was dismissed on October 26,
2015.

On January 22, 2015, Alstom Grid, Inc. filed a
complaint for declaratory judgment of non-infringement of U.S.
Patents 5,828,751, 6,282,648, 6,289,453 and 8,549,310 against
Certified Measurement LLC, a subsidiary of IH, LLC, in the United
States District Court for the District of Delaware, Docket No.
15-072. On February 5, 2015, Certified Measurement LLC filed a
counterclaim alleging infringement of one or more claims of such
patents seeking damages for past, present and future
infringement. This matter had been stayed pending resolution
of the Itron IPRs, which were dismissed February 16, 2016. Since
that time, the stay has been lifted, but Alstom Grid filed a motion
with the Court to extend the stay pending resolution of Alstom
Grid's motion for invalidity under Section 101. Certified
Measurement opposed that motion and the case will proceed until the
Court issues a ruling on the Alstom Grid motion.

30

On June 5, 2015, ABB Inc. filed a complaint for
declaratory judgment of non-infringement of U.S. Patents 5,828,751,
6,282,648, 6,289,453 and 8,549,310 against Certified Measurement
LLC, a subsidiary of IH LLC, in the United States District Court
for the District of Delaware, Docket No. 15-461. On July 29, 2015,
Certified Measurement LLC filed a counterclaim alleging
infringement of one or more claims of such patents and seeking an
injunction and damages for infringement. In November 2015,
Certified Measurement LLC entered into a settlement agreement with
ABB, Inc. and the suit was subsequently dismissed.

We have audited the accompanying consolidated
balance sheets of Walker Innovation Inc. (formerly known as Patent
Properties, Inc.) and Subsidiaries (the ''Company'') as of December
31, 2015 and 2014, and the related consolidated statements of
operations, stockholders' equity and cash flows for the years then
ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.

We conducted our audits in accordance with the
standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audits included
consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred
to above present fairly, in all material respects, the financial
position of Walker Innovation Inc. and Subsidiaries, as of December
31, 2015 and 2014, and the results of its operations and its cash
flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.

Walker Innovation Inc. (formerly known as Patent
Properties, Inc.), a Delaware corporation, collectively, with its
subsidiaries, the ''Company'' or ''Walker Innovation''), has two
distinct lines of businesses. It develops and commercializes its
unique portfolio of intellectual property assets through its
licensing and enforcement operations (''Licensing and
Enforcement'') and more recently in early 2015 it launched its
innovation business through The United States Patent Utility
TM, which has evolved into, and is currently known as
Haystack IQTM (''Haystack IQ''). Haystack IQ uses
proprietary Big Data software to connect the global stockpile of
technology improvements and technical experts, represented by the
U.S. patent database, with businesses that can put them into
commercial uses that help them compete and grow. The Company also
does custom innovation work for large companies seeking to
prototype and commercialize new businesses and new business
methods. Haystack IQ and custom innovation services are referred to
collectively as the Company's ''Innovation'' business.

On July 31, 2015, the Company filed a Certificate
of Amendment of its Certificate of Incorporation with the State of
Delaware, pursuant to which the Company was renamed Walker
Innovation Inc. Walker Digital, LLC (''Walker Digital'') a related
party, is the owner of 82.3% of the voting interest in the Company
and owns approximately 49% of the economic interest in the Company.
Walker Digital was eligible to receive an additional 2,166,667
shares of common stock, subject to meeting certain performance
conditions by February 13, 2016 (''Contingency Shares''). The
performance conditions were not met by that date.

NOTE 2. - SEGMENT INFORMATION

Nature of Business

The Company's two primary segments of business, its
Licensing and Enforcement business, and the operations of its
Innovation business, are described below:

Licensing and Enforcement

The Company develops, licenses and otherwise
enforces patented technologies through its wholly owned
subsidiaries. The Company generates revenues from the granting of
intellectual property rights for the use of, or pertaining to,
patented technologies. The Company also monetizes its intellectual
property through the sale of select patent assets. Patent
protection is a key part of the Company's business model, because
it provides the Company with a period of exclusive ownership during
which the Company has the opportunity to recoup risk capital and
generate a profit from inventions.

Innovation Business

The Company focuses on fostering and creating
systems and tools to help companies innovate more effectively and
efficiently. Currently, the Company accomplishes this two ways -
through its product for small and medium businesses ''Haystack IQ''
and through custom innovation projects for large companies.

Haystack IQ

Haystack IQ, is a subscription-based service that
uses proprietary Big Data software to connect the global stockpile
of technology improvements and technical experts, represented by
the U.S. patent database to businesses that can help put them into
commercial uses that help them compete and grow. This product helps
companies find complementary external resources (ideas, people,
organizations, materials, technologies, approaches) in the global
''haystack'' of R&D investment that can accelerate improvements
to their customer offerings.

Custom Innovation

The Company provides consulting services and
software development to large companies in connection with
prototyping projects as well as the development of customized
innovative ways to serve their customers and grow their market
share. The Company may be engaged by the customer directly, or work
may be subcontracted to it by its controlling stockholder, a
related party, Walker Digital, LLC (''Walker Digital'').

38

NOTE 2. - SEGMENT INFORMATION

The Company does not allocate corporate interest
income and expense, income taxes, other income and expenses related
to corporate activity or corporate expense for management and
administrative services that benefit both segments. Because of this
unallocated income and expense, the operating loss of each
reporting segment does not reflect the operating loss the reporting
segment would report as a stand-alone business.

Key financial information by reportable segment for
years ended December 31, 2015 and 2014 is as follows:

For the Year Ended December 31, 2015

Litigation and

Enforcement

Innovation(1)

Corporate

Total

Net
revenue(1)

$

1,662

$

(973

)

$

-

$

689

Expenses

(2,872

)

(2,023

)

(6,286

)

(11,181

)

Operating loss

(1,210

)

(2,996

)

(6,286

)

(10,492

)

Other income

-

-

75

75

Interest income

-

-

15

15

Net (loss) income

$

(1,210

)

$

(2,996

)

$

(6,196

)

$

(10,402

)

For the Year Ended December 31, 2014

Litigation and

Enforcement

Innovation(1)

Corporate

Total

Net revenue

$

2,066

$

-

$

-

$

2,066

Expenses

(6,505

)

(2,494

)

(8,752

)

(17,751

)

Operating loss

(4,439

)

(2,494

)

(8,752

)

(15,685

)

Other income

-

-

32

32

Interest income

-

-

35

35

Net (loss) income

$

(4,439

)

$

(2,494

)

$

(8,685

)

$

(15,618

)

(1)

Includes $439 of revenue from related party in connection with
work subcontracted to us from a third party.

Capital expenditures for the years ended December
31, 2015 and 2014 was $309 and $30 respectively and was spent in
connection with the Innovation business.

NOTE 3. - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Basis of Presentation

The accompanying consolidated financial statements
of the Company were prepared in accordance with U.S. Generally
Accepted Accounting Principles (''US GAAP'') and include the
assets, liabilities, revenues and expenses of the Company's
wholly-owned subsidiaries over which the Company exercises control.
Intercompany transactions and balances were eliminated in
consolidation.

Use of Estimates

The preparation of consolidated financial
statements in conformity with accounting principles generally
accepted in the United States of America requires management of the
Company to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the consolidated financial
statements. Actual results could differ from these estimates. The
Company's significant estimates and assumptions include stock-based
compensation and the valuation allowance related to the Company's
deferred tax assets, revenue recognition and useful life of assets.
Certain of the Company's estimates could be affected by external
conditions, including those unique to the Company and general
economic conditions. It is reasonably possible that these external
factors could have an effect on the Company's estimates and could
cause actual results to differ from those estimates and
assumptions.

39

Cash and Cash Equivalents

The Company maintains its cash in
bank deposit and money market accounts that, at times, may exceed
federally insured limits. The Company considers money market
accounts that have maturity dates ofthree months or less from the purchase date to be cash
equivalents.

Short term Investments

The Company classifies its investment consisting of
a certificate of deposit with a maturity greater than three months
but less than one year as a short-term investment.

Earnings (Loss) per Share

Basic earnings (loss) per share (''EPS'') is
computed by dividing net income applicable to common stock by the
weighted-average number of common shares outstanding, less any
unvested restricted stock outstanding. Under the treasury stock
method, diluted EPS reflects the potential dilution that could
occur if securities or other instruments that are convertible into
common stock were exercised or could result in the issuance of
common stock. As of December 31, 2015 and 2014, the following
financial instruments were not included in the diluted loss per
share calculation because their effect was anti-dilutive:

2015

2014

Common Stock options

4,263,166

3,628,000

Common Stock warrants

1,980,318

1,980,318

Preferred Stock

14,999,000

14,999,000

Contingency shares

2,166,667

2,166,667

Excluded potentially dilutive securities

23,409,151

22,773,985

Revenue Recognition

Licensing and Enforcement

The Company derives its revenue from patent
licensing and enforcement. In general, these revenue arrangements
provide for the payment of contractually determined fees in
consideration for the grant of certain intellectual property rights
for patented technologies owned or controlled by the Company.
Significantly all of the patent licenses are granted on the entire
portfolio rather than individual patents. Most of the intellectual
property rights granted are perpetual in nature, extending until
the expiration of the related patents, although they can be granted
for a defined, relatively short period of time. The Company
recognizes licensing and enforcement fees when there is persuasive
evidence of a licensing arrangement, fees are fixed or
determinable, delivery has occurred and collectability is
reasonably assured.

Haystack IQ

The Company's revenues are derived from
month-to-month subscriptions to services, some of which may be
billed annually in advance. Subscription revenue is earned each
month as the service is rendered to subscribers on a monthly basis.
The Company recognizes revenue when the subscribers use Haystack
IQ's services, the service has been rendered and earned during the
month, the amount of the subscription is fixed or determinable
based on established rates quoted on an annualized basis and
collectability is reasonably assured. In general, subscriptions are
contracted for a year and subscribers are entitled to refunds on a
pro-rata basis.

Custom Innovation

Revenue is recognized as services are performed
using the percentage of completion method. Revenue is recognized as
services are performed using the percentage of completion method
for fixed price contracts. Revenues for the current period are
determined by multiplying the estimated margin at completion for
each contract by the project's percentage of completion to date,
adding costs incurred to date, and subtracting revenues recognized
in prior periods. In applying the percentage-of-completion method
to these contracts, the Company measures the extent of progress
toward completion as the ratio of costs incurred to date over total
estimated costs at completion. As work is performed under
contracts, estimates of the costs to complete are regularly
reviewed and updated. As changes in estimates of total costs at
completion on projects are identified, appropriate earnings
adjustments are recorded using the cumulative catch-up method.
Provisions for estimated losses on uncompleted contracts are
recorded during the period in which such losses become evident.
Profit incentives and/or award fees are recorded as revenues when
the amounts are both probable and reasonably estimable.

40

Costs Associated with Revenue

Licensing and Enforcement

Contingent legal and consulting fees are expensed
in the Condensed Consolidated Statements of Operations in the
period that the related revenues are recognized. In instances where
there are no recoveries from potential infringers, no contingent
legal and consulting fees are required to be paid; however, the
Company may be liable for certain out of pocket legal and
consulting costs incurred pursuant to the underlying legal and
consulting services agreement. Legal fees advanced by contingent
law firms, if any, that are required to be paid in the event that
no license recoveries are obtained are expensed as incurred and
included in liabilities in the condensed consolidated balance
sheets.

Haystack IQ

Cost of services is comprised of compensation for
Company employees within the software and systems engineering
groups in addition to data costs and amortization expenses. The
expenses related to our hosted software applications are affected
by the number of customers who subscribe to our products and the
complexity and redundancy of our software applications and hosting
infrastructure. The Company expenses these costs as they are
incurred.

Custom Innovation

Costs represent the staff and related other costs
associated with any of the services provided.

Investment

In cases where the Company's investment is less
than 20% of the outstanding voting stock and significant influence
does not exist, the investment is carried at cost, and evaluated
for impairment at each reporting period.

The Company elected the fair value option for its
investment in Flexible Travel Company, LLC (''Flexible Travel'').
As of December 31, 2015, the fair value of this investment is
approximate $672 (see Note 7).

While the Company believes its valuation methods
are appropriate and consistent with other market participants, the
use of different methodologies or assumptions to determine the fair
value of certain financial instruments could result in a different
estimate of fair value at the reporting date.

The decision to elect the fair value option, which
is irrevocable once elected, is determined on an instrument by
instrument basis and applied to an entire instrument. The net gains
or losses, if any, on an investment for which the fair value option
has been elected, are recognized as a change in fair value of
investments in the Consolidated Statements of Operations.

Revenue Concentrations

The Company considers significant revenue
concentrations to be counterparties or significant customers who
account for 10% or more of the total revenues generated by the
Company during the period. For the year ended December 31, 2015 85%
of the Company's revenue was derived from three counterparties. Of
the 85% of the Company's revenue derived from three counterparties,
19% of it was revenue from Walker Digital in connection with custom
innovation subcontracted to the Company. For the year ended
December 31, 2014, the amount of revenue derived from
counterparties representing more than 10% of a total revenue was
96% (with three counterparties representing 45% another 36% and a
third 15%).

Stock Based Compensation

The Company measures the cost of services received
in exchange for an award of equity instruments based on the fair
value of the award. For employees and directors, the fair value of
the award is measured on the grant date and for non-employees, the
fair value of the award is generally measured on the measurement
date and re-measured on each financial reporting date and vesting
date until the service period is complete. The fair value amount is
then recognized over the period services are required to be
provided in exchange for the award, usually the vesting period. The
Company recognizes employee stock-based compensation expense on a
straight line basis over the requisite service period for each
separately vesting tranche of each award. Stock-based compensation
expense is reflected within operating expenses in the Consolidated
Statements of Operations.

41

Website Development costs

Website development costs were expensed as incurred
prior to technological feasibility. Post launch, all costs incurred
by the Company related to the development phase, including costs
incurred for enhancements that are expected to result in additional
new functionality, are capitalized. Such costs are amortized on a
straight-line basis over 36 months. All costs related to the
planning and post-implementation phase, including training and
maintenance, are expensed as incurred. Capitalized costs related to
improvements and enhancements to the functionality of Haystack IQ
are included in property and equipment, net in the Company's
Consolidated Balance Sheets.

Property and Equipment, net

Property and equipment consist primarily of
computer and network hardware and are stated at cost net of
accumulated depreciation and amortization expenses. Leasehold
improvements are amortized over the shorter of their estimated
useful lives or the remaining term of the lease. Lease amortization
is included in depreciation expense. Equipment and software are
depreciated on a straight-line basis over two to five years. Costs
related to maintenance and repairs are expensed as incurred.

Deferred Revenue

Deferred revenue represents prepaid subscription
revenue for future periods from subscribers in connection with
Haystack IQ as well as amounts to be recognized in connection with
the amortization of the Warrant in Flexible Travel.

Costs and Estimated Earnings in Excess of Billings
on Uncompleted Contracts and Billings in Excess of Costs and
Estimated Earnings on Uncompleted Contracts

Unbilled revenues on contracts in progress in the
accompanying consolidated balance sheets represent unbilled amounts
earned and reimbursable under Custom innovation contracts in
progress. These amounts become billable according to the contract
terms, which consider the passage of time, achievement of certain
milestones or completion of the project.

Billings in excess of costs and estimated earnings
on contracts in progress in the accompanying Consolidated Balance
Sheets represent accumulated billings to our Custom innovation
business in excess of the amount earned. The Company anticipates
that the majority of such amounts will be earned as revenue within
one year.

Billings in excess of cost represents revenue to be
recorded in connection with our Custom Innovation business.

Income Taxes

Income taxes are accounted for under the asset and
liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases, and
operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is
recognized in operations in the period that includes the enactment
date. A valuation allowance is provided when it is more likely than
not that some portion or all of a deferred tax asset will not be
realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income and the
reversal of deferred tax liabilities during the period in which
related temporary differences become deductible. The benefit of tax
positions taken or expected to be taken in the Company's income tax
returns are recognized in the consolidated financial statements if
such positions are more likely than not of being sustained.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards
Board (''FASB'') issued Accounting Standards Update (''ASU'') No.
2014-09 (''ASU 2014-09''), ''Revenue from Contracts with
Customers,'' which requires an entity to recognize revenue
representing the transfer of promised goods or services to
customers in an amount that reflects the consideration which the
company expects to receive in exchange for those goods or services.
ASU 2014-09 is intended to establish principles for reporting
useful information to users of financial statements about the
nature, amount, timing and uncertainty of revenues and cash flows
arising from the entity's contracts with customers. ASU 2014-09
will replace most existing revenue recognition guidance in GAAP
when it becomes effective. The original standard was effective for
the Company on January 1, 2017, however, in April 2015, the FASB
proposed a one-year deferral of this standard with a new effective
date for the Company of January 1, 2018. Early application is not
permitted. The Company is currently evaluating the effect that ASU
2014-09 will have on its consolidated financial statements and
related disclosures.

42

In February 2016, the FASB issued
Accounting Standards Update ASU No. 2016-02, ''Leases,'' which
requires an entity that leases assets to recognize on the balance
sheet the assets and liabilities for the rights and obligations
created by those leases. Under the new guidance, a lessee will be
required to recognize assets and liabilities for leases with lease
terms of more than 12 months. Consistent with current U.S. GAAP,
the recognition, measurement, and presentation of expenses and cash
flows arising from a lease by a lessee primarily will depend on its
classification as a finance or operating lease. However, unlike
current GAAP, which requires only capital leases to be recognized
on the balance sheet, the new ASU will require both types of leases
to be recognized on the balance sheet. The standard is effective
for fiscal years beginning afterDecember
15, 2018. Early application is permitted. The Company is currently
evaluating the effect that ASU 2016-02 will have on its
consolidated financial statements and related
disclosures.

Subsequent Events

Subsequent events have been evaluated through the
date of filing.

NOTE 4. - ACCOUNTS RECEIVABLE

Accounts receivable consist of trade receivables
due from subscribers to Haystack IQ as well as an amount due from a
Licensee in connection with a settlement agreement. As of December
31, 2015 and 2014 accounts receivable consist of the following:

2015

2014

Trade Receivables

$

14

$

-

Due from Licensee

825

-

Total accounts receivable

$

839

$

-

NOTE 5. - PREPAID EXPENSES AND OTHER CURRENT
ASSETS

As of December 31, 2015 and 2014 prepaid expenses
and other current assets consist of the following:

2015

2014

Prepaid insurance

$

84

$

248

Prepaid patent costs

22

159

Due from Walker Digital and Flexible Travel
Company

201

-

Prepaid software

273

-

Other prepaid expenses

54

48

Total prepaid expenses and other current
assets

$

634

$

455

NOTE 6. - PROPERTY AND EQUIPMENT

As of December 31, 2015 and 2014 property and
equipment, net, consist of the following:

2015

2014

Computer equipment and software

$

337

$

30

Less: Accumulated Depreciation

(81

)

(1

)

Total property and equipment, net

$

256

$

29

NOTE 7. - INVESTMENTS

Investment in Tagged

The Company received 57,000 shares of common stock
in Tagged, Inc. as part of payment in connection with a license
agreement. If on liquidation date (i.e. public offering or change
of control), the grant value of the stock is less than $250
(''grant value'' or ''floor value''), Tagged will pay the Company
the difference between the $250 floor value and the grant value.
The investment is carried at cost.

43

Investment in Flexible Travel Company

The Company entered into a Shared Services
Agreement (the ''FTC Services Agreement'') dated as of December 4,
2015, with Flexible Travel Company, LLC (''Flexible Travel''), a
company affiliated with Walker Digital, the Company's controlling
stockholder, regarding the provision of executive management,
marketing, legal and financial consulting services. There are no
set deliverables contemplated by the FTC Services Agreement,
although the hourly rates the Company expects to charge Flexible
Travel (approximately equal to the Company's cost) are specified
and under certain circumstances could require audit committee
approval.

In connection with the FTC Services Agreement, the
Company was granted a warrant to purchase limited liability company
interests in Flexible Travel at an exercise price of $0.06 per
Class A common share, which amount has been determined to equal the
fair market value of such shares as of the date of issuance of the
warrant. The warrant was issued to the Company by Jay Walker, who
currently beneficially owns approximately 46% of the aggregate
outstanding limited liability company interests of Flexible Travel
on a fully diluted basis. The total Class A common shares that may
be purchased pursuant to the exercise of the warrant is 16,400,000,
equal to approximately 16% of the current aggregate outstanding
limited liability company interests of Flexible Travel on a fully
diluted basis and the transfer of such shares to the Company is
subject to certain requirements, including the provision of an
opinion of counsel that such would not result in Flexible Travel
being deemed to be a publicly traded partnership for purposes of
U.S. federal income tax law.

The fair value of the warrants (at December 4, 2015
(inception) and as of December 31, 2015) was determined using the
Black-Scholes model with the following assumptions: risk free
interest rate - 1.52%, stock volatility - 83.1%, expected term - 5
years, expected dividends - N/A. The underlying stock price of the
warrant was estimated to be $0.06 per share based on the company's
fundraising activity and the Option Pricing Method Backsolve in
accordance with the guidelines outlined in the American Institute
of Certified Public Accountants Practice Aid, Valuation of
Privately-Held-Company Equity Securities Issues as
Compensation. The valuation of the underlying shares included
the following assumptions: risk-free rate - 1.52%, company
volatility - 50%, expected term or time to maturity - 5 years. In
connection with the issuance of these warrants, the Company
recorded deferred revenue of $672 as of December 31, 2015 and has
amortized $25 of this deferred revenue into other income during the
year ended December 31, 2015.

NOTE 8. - SHARED SERVICES AGREEMENT

Walker Digital

The Company has a Shared Services Agreement (''WDM
Shared Services Agreement'') with Walker Digital Management
(''WDM''). The cost of such services varies monthly based on the
terms of the WDM Shared Services Agreement. The incurred expenses
include but are not limited to executive compensation, information
technology services and supplies, administrative and general
services and supplies and rent and utilities, are based either on
specific attribution of those expenses or, where necessary and
appropriate, based on the Company's best estimate of an appropriate
proportional allocation.

The following table represents
operating expenses contributed by WDM on behalf of the Company and
expenses incurred under the WDM Shared Services Agreement for the
years ended December 31, 2015and
2014:

(dollars in thousands)

2015

2014

Compensation
Expenses(1)

$

63

$

116

Rent and Utilities

257

132

Office Services and Supplies

36

26

Telephone

34

18

Other

67

50

Total Operating Expenses

$

457

$

342

(1)

Compensation expenses are net of services charged to WDM.
During the years ended December 31, 2015 and 2014, the Company
charged approximately $34 and $61 of expenses, respectively,
related to such services.

As of December 31, 2015 and 2014, due from WDM in
the amount of $147 and $10, respectively and these amounts were
included in prepaid and current assets. In addition there was $47,
and $55, for the years ended December 31, 2015 and 2014 due to WDM
included in accounts payable.

44

Flexible Travel Company

In December 2015, the Company entered into the FTC
Services Agreement with Flexible Travel to provide executive
management, marketing, legal and financial consulting services. For
the year ended December 31, 2015 the Company provided approximately
$50 of expenses related to such services and these amounts are
included in Other Income on the Consolidated Statement of
Operations and had $53 included in prepaid and other current
assets.

NOTE 9. - COMMITMENTS AND CONTINGENCIES

Leases

The Company's corporate headquarters is located at
Two High Ridge Park, Stamford, Connecticut. The Company leases
space pursuant to the WDM Shared Services Agreement. The lease will
expire in September of 2016. The annual rent for the office space
occupied by the Company is approximately $215.

Litigation

The Company is subject to claims, counterclaims and
legal actions that arise in the ordinary course of business. The
plaintiff in each patent suit may have defenses to any
counterclaim. In addition, the defendants in certain of the patent
suits may file motions seeking costs and fees against the
plaintiff, which may be opposed. The Company may also be subject to
legal actions arising from claims against Walker Digital related to
certain patent families the Company received by recorded assignment
from Walker Digital. Management believes that the ultimate
liability with respect to these claims and legal actions, if any,
will not have a material effect on the Company's financial
position, results of operations or cash flows. The Company
recognizes a liability for a contingency when it is probable that
liability has been incurred and when the amount of loss can be
reasonably estimated. When a range of probable loss can be
estimated, the Company accrues the most likely amount of such loss,
at no less than the minimum of the range. As of December 31, 2015
and 2014, the litigation accrual was not material.

Accrued Bonuses

As of December 31, 2015 and 2014, accrued bonuses
included in accrued expenses on the Consolidated Balance Sheets
were $81 and $200, respectively. Accrued bonuses are primarily
discretionary in nature.

NOTE 10. - EQUITY

The Company has authorized and issued an aggregate
of 100,000,000 shares of common stock, par value $0.001 per share.
The Company has authorized and issued an aggregate of 15,000,000
shares of preferred stock, par value $0.001 per share, 14,999,000
shares of which have been designated Series B Convertible Preferred
Stock. As of December 31, 2015, there were 21,134,744 shares of the
Company's common stock issued and 20,741,572 outstanding and
14,999,000 shares of the Company's Series B Convertible Preferred
Stock were issued and outstanding.

Common Stock

The holders of our common stock are entitled to one
vote per share. Our Certificate of Incorporation does not provide
for cumulative voting. The holders of our common stock are entitled
to receive ratably such dividends, if any, as may be declared by
the Board of Directors out of legally available funds pari
passu with the holders of our Series B Convertible Preferred
Stock, on an as-converted to common stock basis.

Upon liquidation, dissolution or
winding-up of the Company the holders of the common stock and the
holders of the Series B Convertible Preferred Stock, based on the
number of shares of the Company's common stock into which the
Series B Convertible Preferred Stock is convertible, are entitled
to share ratably in all assets of the Company which are legally
available for distribution, after payment of or provision for
allactual and potential liabilities and
the liquidation preference of any outstanding preferred stock
bearing such a preference, of which currently there are none. The
holders of the common stock have no preemptive, subscription,
redemption or conversion rights.

45

Series B Convertible Preferred Stock

Holders of the Series B Convertible Preferred Stock
are entitled at any time to convert their shares of Series B
Convertible Preferred Stock into an equal number of shares of the
Company's common stock, subject to adjustment in the event of a
stock dividend, subdivision or combination of the Company's common
stock. Upon liquidation, dissolution or winding-up of the Company,
the holders of our common stock and the holders of the Series B
Convertible Preferred Stock, based on the number of shares of the
Company's common stock into which the Series B Convertible
Preferred Stock is convertible, are entitled to share ratably in
all assets of the Company which are legally available for
distribution, after payment of or provision for all actual and
potential liabilities and the liquidation preference of any
outstanding preferred stock bearing such a preference, of which
currently there are none. In the event of any liquidation,
dissolution or winding up of the Company, the assets legally
available for distribution will be distributed ratably among the
holders of the Series B Convertible Preferred Stock and the common
stock, based on the number of shares of the Company's common stock
into which the Series B Convertible Preferred Stock is convertible.
The holders of our Series B Convertible Preferred Stock are
entitled to receive ratably such dividends, if any, as may be
declared by the Board of Directors out of legally available funds,
pari passu on an as-converted to common stock basis with the
amount of such dividends to be distributed to the holders of our
common stock immediately prior to the declaration of such dividend
or distribution. The shares of Class B Convertible Preferred Stock
will vote together with the Company's common stock on all matters
where stockholders are entitled to vote. The holders of shares of
Series B Convertible Preferred Stock are entitled to cast an
aggregate of 80.0% of the total votes that may be cast with respect
to any such matter, including the election of all directors.

NOTE 11 - STOCK-BASED COMPENSATION

Total stock-based compensation to employees and
non-employees for the years ended December 31, 2015 and 2014 is
presented in the following table:

2015

2014

Employee Option Awards

$

2,213

$

2,047

Non-employee Compensation Expense

21

289

Non-employee Restricted Stock Awards

-

3,088

Total Compensation Expense

$

2,234

$

5,424

Stock-Based Compensation Plans

The Company's Board of Directors has adopted two
stock-based employee compensation plans, the Amended and Restated
2006 Long-Term Incentive Plan and the Amended and Restated 2015
Long-Term Incentive Plan collectively referred to as the
(''Incentive Plans''). The Incentive Plans, which provide for the
granting of restricted stock awards, deferred stock unit awards,
stock option awards and other equity and cash awards, were adopted
for the purpose of encouraging key employees, consultants and
directors who are not employees to acquire a proprietary interest
in the growth and performance of the Company. The Compensation
Committee had the authority to determine the amount, type and terms
of each award, but may not grant awards under the Incentive Plans,
in any combination, for more than 1,000,000 shares of the Company's
common stock to any individual during any calendar year.

As of December 31, 2015, 1,344,176 shares of common
stock remain eligible to be issued under the Incentive Plans.

Stock Option Awards

The following table summarizes the Company's stock
option award activity:

Number of
Shares

Weighted
Average
Exercise Price

Outstanding at December 31, 2013

2,305,000

$

3.96

Options Granted

1,573,000

3.22

Options Exercised

-

-

Options Cancelled

(250,000

)

3.98

Outstanding at December 31, 2014

3,628,000

$

3.64

Options Granted

1,151,500

$

1.18

Options Exercised

-

-

Options Cancelled

(223,333

)

3.98

Options Forfeited

(293,001

)

2.95

Outstanding at December 31, 2015

4,263,166

$

3.01

Options Vested and Exercisable at December 31,
Options Vested and Exercisable at December 31, 2015

1,915,827

$

3.58

46

The stock option awards are exercisable at various
times through 2018. Additional information with respect to the
outstanding stock option awards as of December 31, 2015, is as
follows:

Options Outstanding

Options Exercisable

Options
Outstanding

Weighted
Average
Remaining
Contractual
Life in Years

WeightedAverageExercisePrice perShare

Options
Exercisable

Weighted
Average
Exercise
Price Per
Share

Weighted
Average
Remaining
Contractual
Life

Range of Exercise Prices

$0.00 - 0.50

325,000

9.81

$

0.30

49,998

$

0.37

9.75

$0.51 - 1.00

3,500

9.61

0.63

-

-

-

$1.01 - 1.50

718,000

9.33

1.39

27,500

1.40

9.38

$1.51 - 2.00

25,000

2.00

2.00

25,000

2.00

2.00

$2.01 - 2.50

162,500

8.98

2.20

30,833

2.20

8.98

$2.51 - 3.00

67,500

8.70

2.62

57,500

2.64

8.71

$3.01 - 3.50

740,000

6.35

3.18

428,333

3.18

5.00

$3.51 - 4.00

595,000

8.17

3.66

209,999

3.67

8.17

$4.01 - 4.50

1,626,666

7.85

4.05

1,086,664

4.05

7.84

Total

4,263,166

8.06

$

3.01

1,915,827

$

3.58

7.28

As of December 31, 2015, the Company had
unrecognized stock-based compensation expense related to all
unvested stock options of $2.1 million, which is expected to be
recognized over the remaining weighted-average vesting period of
1.2 years.

The total fair value of the
885,831 stock option awards that vested during the year was
approximately$1.97 million. At December
31, 2015, there was no aggregate intrinsic value of the fully
vested stock option awards and the weighted average remaining
contractual life of the stock option awards was 7.3 years. The
Company has not capitalized any compensation cost, or modified any
of its stock option awards and nocash
was used to settle equity instruments granted under the Company's
Incentive Plan for the years ended December 31, 2015, and 2014.
There were no stock option awards exercised during December 31,
2015 and 2014.

Other selected information is as follows:

2015

2014

Aggregate intrinsic value of outstanding
options

$

-

$

-

Weighted average fair value per share of options
granted

$

0.63

$

1.56

The fair value of stock option awards granted is
estimated on the date of grant using a Black-Scholes option pricing
model. The expected life of the options was calculated using the
simplified method, using the average of the contractual term and
the vesting period. Due to the limited operating history of the
Company, the expected volatility used to calculate the fair value
of options granted during the year ended December 31, 2014 and for
the six months ended June 30, 2015 was based on a relevant industry
index as permitted under ASC 718-30-30. Effective the third quarter
of 2015, the Company used historical volatility rates. Management
monitors stock option exercises and employee termination patterns
to estimate forfeiture rates within the valuation model. The
expected holding period of options represents the period of time
that options granted are expected to be outstanding. The risk-free
interest rate for periods within the expected life of the option is
based on the interest rate of the U.S. Treasury note in effect on
the date of the grant.

The table below presents the weighted average
assumptions used to calculate the fair value of stock option awards
granted during the years ended December 31, 2015 and 2014,
respectively:

2015

2014

Risk Free Interest
Rate

0.79 − 2.19

%

1.64 − 2.75

%

Expected Volatility

64.1% − 87.5

%

55.6% − 74.1

%

Dividend Yield

0

%

0

%

Expected Life in
Years

6.3

6.0

47

Stock-based Compensation to Non-employees

Stock-based compensation expense related to
stock-based awards to non-employees is recognized as the
stock-based awards are earned, generally through the provision of
services. The Company believes that the fair value of the
stock-based awards is more reliably measurable than the fair value
of the services received. The fair value of the granted stock-based
awards is remeasured at each reporting date.

NOTE 12 - INCOME TAXES

The Company's deferred tax assets consisted of the
effects of temporary differences attributable to the following:

As of
December 31,
2015

As of
December 31,
2014

Deferred Tax Asset

Net-operating loss carryforward

$

11,429

$

8,001

Stock-based compensation

1,795

909

Others

(52

)

107

Total Deferred Tax Assets

13,172

9,017

Valuation Allowance

(13,172

)

(9,017

)

Deferred Tax Asset, Net of Allowance

$

-

$

-

As of December 31, 2015, the Company had federal
and state net operating loss carryovers of approximately $28.6
million, which expire in 2033. The net operating loss carryover may
be subject to limitation under Internal Revenue Code section 382,
should there be a greater than 50% ownership change, as determined
under the regulations. The Company has identified its federal and
state tax return of Connecticut as ''major'' tax jurisdictions as
defined.

In assessing the realization of deferred tax
assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will be
realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the
period in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax assets,
projected future taxable income and taxing strategies in making
this assessment. The Company has determined that, based on
objective evidence currently available, it is more likely than not
that the deferred tax assets will not be realized in future
periods. Accordingly, the Company has provided a valuation
allowance for the full amount of the deferred tax assets at
December 31, 2015 and 2014.

The expected tax expense (benefit) based on the
U.S. federal statutory rate is reconciled with actual tax expense
(benefit) as follows:

As of December 31,
2015

As of December 31,
2014

Statutory Federal Income Tax Rate

(34.0

)%

(34.0

)%

State Taxes, Net of Federal Tax Benefit

(5.9

)%

(5.0

)%

Change in Valuation Allowance

39.9

%

39.3

%

Change in State Rate

(2.2

)%

-

Others

2.2

%

(0.3

)%

Income Tax Provision (Benefit)

0.0

%

0.0

%

(dollars in thousands)

As of December 31, 2015

As of December 31, 2014

Federal

Current

$

-

$

-

Deferred

3,023

7,871

State

Current

-

-

Deferred

1,132

1,146

Change in Valuation Allowance

(4,155

)

(9.017

)

Income Tax Provision (Benefit)

$

-

$

-

48

The Company accounts for uncertain tax positions in
accordance with the provisions of ASC 740. When uncertain tax
positions exist, the Company recognizes the tax benefit of tax
positions to the extent that the benefit will more likely than not
be realized. The determination as to whether the tax benefit will
more likely than not be realized is based upon the technical merits
of the tax position, as well as consideration of the available
facts and circumstances. As of December 31, 2015 and 2014, the
Company does not have any significant uncertain tax positions. The
Company recognizes interest and penalties related to uncertain tax
positions in income tax expense.

NOTE 13 - SOFTWARE AGREEMENT

On May 8, 2014 (the ''Effective Date''), the
Company entered into a Software as Service Agreement (the
''Agreement'') with Innography, Inc. (''Innography'') under which
the Company will have access to Innography's proprietary web-based
application software platforms and patent related data and
analytics functionality in connection with the development and
commercialization of Haystack IQ. The term of the Agreement
commences on the Effective Date and continues until the two year
anniversary of the Effective Date (the ''Initial Term''). The
Agreement may be renewed for up to three additional and consecutive
one year renewal periods (each a ''Renewal Term''). The Agreement
will renew for the first and second Renewal Terms unless the
Company elects to terminate the Agreement in advance of renewal and
will renew for the third Renewal Term unless either party elects to
terminate the Agreement in advance of renewal. In the event of a
change of control, as defined in the Agreement, of Innography, on
or after June 30, 2015 Innography may terminate the then current
term on 60 days' notice (''Control Termination''). In the event of
a Control Termination or if the Agreement is not renewed for an
optional Renewal Term, or after the last of up to three Renewal
Terms expires, the Company may renew for an additional one year
period during which Innography will provide its services and
reasonably assist the Company in migrating to a replacement service
(the ''Wind Down Term'').

Concurrent with the execution of the Agreement, the
Company paid a one-time fee of $200. In consideration for the
access to Innography's software application, the Company paid a fee
of $350 on July 1, 2014, $500 on January 1, 2015 and $650 on July
1, 2015. For each Renewal Term the Company will pay semi-annual
payments of $800 on January 1 and July 1, but the semi-annual
payments may increase from $800 to $1.1 million if the Company's
semi-annual net revenues, as defined in the Agreement, exceed $15
million. In the event that the Wind Down Term extends beyond the
fifth anniversary of the Effective Date, the semi-annual rates
shall increase 20% for any portion of the Wind Down Term that
occurs after the fifth anniversary of the Effective Date. The
Company recognized this expense on a straight line basis over the
term of the Agreement.

NOTE 14 - CUSTOM INNOVATION CONSULTING - RELATED
PARTY

On August 20, 2015, the Company entered into an
Engagement Agreement (the ''Engagement Agreement'') with Walker
Digital, regarding the provision of software development and
consulting services. The initial work order received by the Company
under the Engagement Agreement is with respect to a prototype
project involving a Fortune 500 insurance company that previously
retained Walker Digital to design and develop viable new business
models. Payments totaling $1.5 million were paid to the Company
through December 31, 2015. The Company is recognizing service
revenues under this contract on a percentage of completion basis,
as prototyping services are provided. Although management believes
it has established adequate procedures for estimating costs to
complete on open contracts, it is at least reasonably possible that
additional significant costs could occur on contracts prior to
completion. The Company periodically evaluates and revises its
estimates and makes adjustments when they are considered
necessary.

The Costs and Estimated Earnings on Uncompleted
Contracts is summarized as follows:

December 31,
2015

Costs incurred on uncompleted contracts

$

388

Estimated earnings

51

Revenue recognized

439

Less billings to date

(1,500

)

Billings in excess of cost

$

1,061

49

MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

The following discussion and analysis of the
financial condition and results of our operations should be read in
conjunction with our financial statements and the notes to those
statements. This discussion contains forward-looking statements
reflecting our management's current expectations that involve risks
and uncertainties. Actual results and the timing of events may
differ materially from those contained in these forward-looking
statements due to a number of factors, including those discussed
under the heading "Risk Factors" and elsewhere in this
prospectus.

General

Narrative discussions of dollar figures are in
thousands, except per share data and where the context indicates
otherwise.

We, through our wholly-owned subsidiaries, create,
commercialize and, when necessary, enforce business innovations and
deliver innovation services to help companies compete and grow.
These activities are conducted primarily through three areas of
focus:

·

We seek to commercialize our unique
portfolio of intellectual property assets through our licensing and
enforcement operations (''Licensing and Enforcement'');
and

·

We are available to large corporations that
need custom innovation services to create, prototype and
commercialize new businesses and new business methods that improve
corporate performance.

The Company is led by
entrepreneur and inventor Jay Walker, who is best known as the
founder of Priceline.com and has twice been named by TIME magazine
as ''one of the top 50 business leaders of the digital age.'' Mr.
Walker currently ranks as the world's 11th most patented
living individual, based on U.S. patent
issuances according to Wikipedia.

All of our intellectual property assets were
created with the goal of solving business problems, with the intent
to achieve commercial status. However, it is our belief that many
of our inventions have become part of the commercial activities of
other businesses without having been licensed, depriving us of
financial value. Our Licensing and Enforcement segment is currently
pursuing 2 matters in the US District Court in Delaware and the
Federal Circuit Court of Appeals regarding our inventions. The
Company is also engaged in an arbitration relating to its
intellectual property assets against a third party described below.
We may expand our enforcement activities to other patents in our
portfolio and other unlicensed users of those patents that have
previously been asserted in litigation, although the timing and
extent of these activities depends upon many factors affecting the
patent enforcement industry that are beyond our control.

We believe the market for services that help
companies identify complementary knowledge, expertise and resources
outside the firm to speed internal problem solving and reduce time
to market is both large and in need of new tools and new thinking.
We have developed a way to unlock the huge capacity for problem
solving currently hidden inside the U.S. patent database and,
ultimately, other technical literature.

In 2013, we acquired ownership of the intellectual
property assets that were primary to Walker Licensing's business,
subject to certain enumerated cases and orders, judgments,
decisions or other actions taken in connection with any patent
litigation or by the USPTO. In this regard, the Company is involved
in a legal action arising from claims related to certain patent
families we received from Walker Digital by recorded assignment at
the time of the Merger due to an adverse judicial decision relating
to interpretation of the terms of a settlement agreement entered
into by Walker Digital with a third party prior to the Merger.
Although the decision does not specifically address our patents,
the Company has been notified by the third party and its assignee
that they believe the court's decision supports the third party's
claim that a large number of patents, including the patents
assigned to the Company by Walker Digital, had been conveyed to
them by assignment under the settlement agreement. The third party
has also indicated it may seek damages against the Company arising
from that same set of facts. Walker Digital and the Company
commenced an arbitration on March 31, 2015 against the third party
seeking reformation of the settlement agreement between the third
party and Walker Digital. In the alternative, Walker Digital and
the Company are seeking in the arbitration a declaratory judgment
as to which particular patents had been assigned to the third
party. In the arbitration the third party is seeking a declaratory
judgment that it is the owner (as a result of the settlement
agreement) of a substantial number of the Company's patents, as
well as patents from Walker Digital. None of the patents sought by
the third party in arbitration are currently being enforced in the
Company's licensing and enforcement litigation. On November 30,
2015, the parties agreed to stay the arbitration. The stay, which
has been amended, will expire upon ten business days notice by
either party. The hearing in the case was originally scheduled for
early March 2016. If the stay expires without resolution of the
arbitration, the hearing will be rescheduled to a later date. The
Company and Walker Digital have entered into a tolling agreement
with respect to claims the Company may have against Walker Digital
in the event the Company is required to assign to the third party
certain of the patents assigned to the Company by Walker Digital at
the time of the Merger or if it is required to pay any damages to
the third party. The Company is unable to determine the ultimate
liability, if any, with respect to the matter described above, but
believes it will not have a material effect on the Company's
financial position, results of operations or cash flows.

50

All improvements to the intellectual property
assets that were primary to Walker Licensing's business have been
assigned to our subsidiary Inventor Holdings, LLC pursuant to an
Invention Assignment Agreement with Mr. Walker. While the terms of
the Invention Assignment Agreement do not entitle us to any other
intellectual property Mr. Walker may develop in the future, in view
of his significant equity position in the Company and the Company's
platform for the protection of the intellectual property it holds,
Mr. Walker may nevertheless determine to develop and commercialize
intellectual property through the Company. The terms and conditions
of any such transaction would be negotiated between Mr. Walker and
our Audit Committee at the time of such determination.

Overview

Our operating activities during fiscal 2015 were
principally focused on the launch and initial analysis of market
reception of our previous product Haystack IQTM, with a
reduced emphasis on the development, licensing and enforcement of
our patent portfolios due to several factors adversely affecting
the patent enforcement. Our Licensing and Enforcement revenues
historically have fluctuated period to period, and can vary
significantly, based on a number of factors including the
following:

·

the dollar amount of agreements
executed each period, which can be driven by the nature and
characteristics of the technology or technologies being licensed
and the magnitude of infringement associated with a specific
licensee;

·

the specific terms and
conditions of agreements executed each period including the nature
and characteristics of rights granted, and the periods of
infringement or term of use contemplated by the respective
payments;

·

fluctuations in the total number
of agreements executed each period;

·

the timing, results and
uncertainties associated with patent filings and other enforcement
proceedings relating to our intellectual property
rights;

·

the relative maturity of
licensing programs during the applicable periods; and

·

other external factors,
including developments in the law affecting patent
enforcement.

Counterparties refer to those parties who were
defendants in patent infringement cases that had been brought by
us. Certain of these cases have been settled by entering into
patent sale agreements, which typically results in one-time
payments to us that are recognized as revenue. All of the other
revenue was generated through settlement and non-exclusive license
agreements. All of the agreements provide for a one-time payment to
the Company. Generally we are willing to engage in settlement
discussions with defendants at any appropriate time during the
course of litigation. We will agree to settle a dispute with a
defendant when we believe that such a settlement and the terms of
the agreement are in the best interest of the Company and its
shareholders. The environment for entering into such patent sale
agreements or license agreements in the first half of 2015 was
adversely affected by several significant developments in the
intellectual property industry, including the continued effect of
the Leahy-Smith America Invents Act of 2011 (including several new
means by which challenges of our patents may be effected, including
inter partes review proceedings (''IPR'')) and the Supreme Court
holding in the Alice Corp. v. CLS Bank International case,
which called into question the patentability of computer software.
In view of these trends (including our inability to enforce any
patents that are the subject of inter partes review), we are
anticipating that the revenue from Licensing and Enforcement will
continue to be below historic levels.

We had initially planned to fund
our investment in sales, marketing and infrastructure in Haystack
IQ with the operating cash flows of our Licensing and Enforcement
activities. In view of the negative trends in the patent licensing
industry discussed above and the potential adverse impact of those
changes on our revenues, we needed to decrease our investment in
Haystack IQand in March 2016 determined
to wind down its operations.

On December 4, 2015, the Company entered into the
Upside Holdings Services Agreement with Upside Holdings, a company
controlled by Mr. Walker and affiliated with Walker Digital, the
Company's controlling stockholder, regarding the provision of
executive management, marketing, legal and financial consulting
services. There are no set deliverables contemplated by the Upside
Holdings Services Agreement, although the hourly rates the Company
changes Upside Holdings (approximately equal to the Company's cost)
are specified. In connection with the Upside Holdings Services
Agreement, the Company was granted a warrant to purchase limited
liability interests at a price of $0.06 per Class A Common Share in
Upside Holdings. The warrant was issued to the Company by Mr.
Walker, who currently beneficially owns approximately 76% of the
aggregate outstanding limited liability company interests of Upside
Holdings.

51

The fair value of the warrant was determined using
the Black-Scholes model and in connection with the issuance of
these warrants, the Company recorded deferred revenue of $672 as of
December 31, 2015 and has amortized $25 of this deferred revenue
into other income during the year ended December 31, 2015.

Results of Operations

Year Ending December 31, 2015 Compared with Year
Ending December 31, 2014

Net Income (Loss)

Net loss for the year ended December 31, 2015 was
$10.4 million, as compared to net loss of $15.6 million for the
year ended December 31, 2014.

Operating expenses of $11.2 million for the year
ended December 31, 2015 included other legal and consulting fees of
$2.0 million patent prosecution and maintenance fees of $0.5
million, compensation and related benefits, including non-cash
compensation of $5.3 million, professional fees of $1.7 million,
general and administrative expenses of $1.3 million and marketing
expenses of $0.3 million. Net revenue totaled $0.7 million for the
year ended December 31, 2015.

Operating expenses of $17.8 million for the year
ended December 31, 2014 included other legal and consulting fees of
$2.3 million, patent prosecution and maintenance fees of $1.0
million, compensation and related benefits, including non-cash
compensation of $6.4 million, professional fees of $5.7 million,
general and administrative expense of $2.1 million, which includes
$0.9 million of software and technology related services incurred
in connection with the launch of the predecessor to Haystack IQ,
and marketing expenses of $0.3 million. Net revenue totaled $2.1
million for the year ended December 31, 2014.

Revenues

(dollar amounts presented in
thousands)

Year Ended
December 31, 2015

Year Ended
December 31, 2014

% Change

Licensing revenue

$

1,732

$

2,948

(41.288

)%

Subscription revenue

144

-

N/An

Custom Innovation (related party)

439

-

N/A

Total revenue

$

2,315

$

2,948

(21.5

)%

We recognized revenues of $2.3 million in 2015, a
21% decrease compared to 2014 revenues of $2.9 million.

For the year ended December 31, 2015 we generated
revenue from three licensing agreements compared to five licensing
agreements during fiscal 2014. Our revenues historically have
fluctuated based on the number of patented technology portfolios,
the timing and results of patent filings and our enforcement
proceedings relating to our intellectual property rights. Licensing
revenues for the year ended December 31, 2015 were generated
primarily in the fourth quarter.

As of December 31, 2015 we had over 20
subscriptions in queue and we recognize the revenue from the Custom
Innovation work based on the percentage of completion. The
predecessor to Haystack IQ was not launched until early 2015, and
the Custom Innovation contract was signed in 2015. Accordingly, for
the year ended December 31, 2014 no subscription revenue or Custom
Innovation revenue was recognized.

Cost of Revenue

Legal and Consulting Contingency Fees

Legal and consulting contingent fees for the years
ended December 31, 2015 and 2014 were $71 and $882, respectively.
As a percentage of licensing revenue, legal and consulting
contingent fees were 4% during 2015 and 30% in 2014. Our legal and
consulting contingent fees are dependent upon the realization of
revenue. The improvement in the realization is attributed to the
mix of cases using contingent firms compared to hourly firms, and
two of the three cases settled during 2015 had no contingency fees
associated with them.

52

Cost of Subscription Revenue

Cost of subscription revenue is comprised of
compensation for Company employees within the software and systems
engineering groups in addition to data costs and amortization
expenses. For the year ended December 31, 2015 this amount totaled
$1.18 million as the Company was ramping and had not achieved scale
at which it could amortize its technology costs.

Cost of Custom Innovation Work

Costs of custom innovation work represent the staff
and related other costs associated with any of the services
provided. For the year ended December 31, 2015 this amount totaled
$372.

Licensing and Enforcement Expenses

(dollar amounts presented in
thousands)

Year Ended
December 31, 2015

Year Ended
December 31, 2014

% Change

Other legal and consulting fees

$

2,074

$

2,342

(11.4

)%

Patent prosecution and maintenance costs

449

993

(54.8

)%

Total licensing and enforcement expenses

$

2,523

3,335

(24.3

)%

Other legal and consulting expenses for the years
ended December 31, 2015 and 2014 were $2.1 million and $2.3
million, respectively. The decrease in other legal and consulting
fees during 2015 as compared to 2014 was mainly attributable to the
mix of our contingent and hourly legal fees related to our existing
active cases, the number of cases, as well as a very focused
approach to our existing litigation. Other legal and consulting
expenses fluctuate from period to period based on patent
enforcement and prosecution activity associated with ongoing
licensing and enforcement programs and the timing of the
commencement of new licensing and enforcement programs in each
period. We expect other legal and consulting expenses to continue
to fluctuate period to period based on the factors summarized
above, in connection with upcoming scheduled trial dates and our
current and future patent development, licensing and enforcement
activities.

Patent prosecution and maintenance expenses for the
years ended December 31, 2015 and 2014 were $449 and $993,
respectively. Patent prosecution and maintenance expenses are
directly related to the number of re-examinations in connection
with patent prosecutions.

General and Administrative Expenses

(dollar amounts presented in
thousands)

Year Ended
December 31, 2015

Year Ended
December 31, 2014

% Change

Compensation and benefits

$

5,288

$

6,357

(16.8

)%

Professional fees

1,721

5,724

(69.9

)%

General and administrative

1,349

2,056

(34.4

)%

Marketing

300

279

7.5

%

Total general & administrative expenses

$

8,658

$

14,416

(39.9

)%

Compensation and benefits expense for the years
ended December 31, 2015 and 2014 were $5.3 million and $6.4
million, respectively and includes share based compensation of $2.0
million and $2.1 million for the year ended December 31, 2015 and
2014, respectively. Compensation and benefits expense decreased by
approximately $1.0 million, or 17%, for fiscal 2015 as compared to
fiscal 2014. The decrease in compensation and benefits can be
primarily attributable to the decrease in the average number of
full time active employees during fiscal December 31, 2015 compared
to fiscal December 31, 2014.

Professional fees decreased by 70% to $1.7 million
for the year ended December 31, 2015 from $5.7 million for the year
ended December 31, 2014. For the year ended December 31, 2015
professional fees primarily fees paid to outside corporate counsel
of $297, accounting and audit of $237, public company expenses of
$91, board of directors and advisors of $575, investor relations of
$336 and consulting expenses related to Haystack IQ of $192.

Professional fees of $5.7 million for the year
ended December 31, 2014 relates primarily to $3.1 million of
stock-based compensation expense for awards earned concurrent with
the Merger, accounting and corporate legal fees of $681, board and
advisory fees of $691 (which includes $40 of stock-based
compensation) investor and public relations costs of $516
(including $28 of stock-based compensation) and public company
costs of $258 million. Stock based compensation is related to the
issuance of 1,445,000 shares of Common Stock to a vendor, IP
Navigation, in connection with the Merger. The Company had an
existing service agreement with IP Navigation, a patent
monetization firm. On September 18, 2013, in connection with the
amendment of this service agreement, IP Navigation reduced its
future fees from 22.5% to 15% and the Company issued 1,445,000
shares of Common Stock to IP Navigation. The Common Stock vested in
March 2014. We recorded the pro rata portion of this non-employee
award as a component of professional fees at $3.1 million, the fair
value of the award.

53

Total general and administrative expenses decreased
by approximately 34% to $1.3 million for the year ended December
31, 2015 from $2.1 million for the year ended December 31, 2014 and
includes software and technology services. The decrease is
attributed to the following: decreased software and technology
services of $635 incurred in connection with the development and
commercialization of the predecessor of Haystack IQ and primarily
represents fees paid to Innography, Inc. in connection with their
proprietary web-based application software platform and patent
related data and analytics, decreased travel and entertainment
expenses of $73 of decreased insurance expense of $67 and decreased
conferences of $46. These decreases were partially offset by
increases in corporate taxes of $112, rent of $108 and amortization
and depreciation expense of $79.

For the year ended December 31, 2015 the Company
incurred $300 of marketing costs in connection with the promotion
of the Haystack IQ and its predecessor.

Other Income

Other income for the year ended December 31, 2015
increased to $75 from $32 for the year ended December 31, 2014.
This increase relates to approximately $50 in fees received in
connection with the FTC Services Agreement as well as $25 of
amortization of the deferred revenue created in connection with
warrant.

Critical Accounting Policies and Estimates

Our significant accounting policies are more fully
described in Note 3 to our consolidated financial statements. The
preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect
the reported amounts of assets, liabilities, revenues, and
expenses, and the related disclosures of contingent assets and
liabilities. Actual results could differ from those estimates under
different assumptions or conditions. The Company's significant
estimates and assumptions include stock-based compensation, revenue
recognition, useful lives of assets and the valuation allowance
related to the Company's deferred tax assets.

Liquidity and Capital Resources

Our current assets were $7.4 million at December
31, 2015, including $5.9 million of cash and cash equivalents.
Working capital amounted to $5.0 million as of December 31, 2015.
We have narrowed the focus of our litigation business to those
patent families that we believe will yield the highest return and
we have discretion as to whether the associated legal costs are
incurred hourly or on a contingent basis. In addition, we have
reduced overhead by eliminating positions and streamlining
processes. We believe we have the ability to manage our expenses
while we grow our top line and therefore believe that the Company's
cash and cash equivalents is sufficient to meet our liquidity needs
for at least the next twelve months.

Cash used in operating activities was approximately
$9.2 million for the year ended December 31, 2015. During fiscal
2015, the Company spent approximately $1.9 million on building its
Web site, hiring a team, and establishing infrastructure related to
Haystack IQ and its predecessor and $2.5 million on its Licensing
and Enforcement business and $4.8 million on corporate
activities.

Contractual Obligations

We had no significant commitments for capital
expenditures and we have no committed lines of credit or other
committed funding or long-term debt as of December 31, 2015.

Off-Balance Sheet Transactions

We are not party to any off-balance sheet
transactions. We have no guarantees or obligations other than those
which arise out of normal business operations.

54

Recently Issued Accounting Pronouncements

In May 2014, the Financial
Accounting Standards Board (''FASB'') issued Accounting Standards
Update (''ASU'') No. 2014-09 (''ASU 2014-09''), ''Revenue from
Contracts with Customers,'' which requires an entity to recognize
revenue representing the transfer of promised goods or services to
customers in an amount that reflects the consideration which the
company expects to receive in exchange for those goods or
services.ASU 2014-09 is intended to
establish principles for reporting useful information to users of
financial statements about the nature, amount, timing and
uncertainty of revenues and cash flows arising from the entity's
contracts with customers. ASU 2014-09 will replace most existing
revenue recognition guidance in GAAP when it becomes effective. The
original standard was effective for the Company on January 1, 2017,
however, in April 2015, the FASB proposed a one-year deferral of
this standard with a new effective date for the Company of January
1, 2018. Early application is not permitted. The Company is
currently evaluating the effect that ASU 2014-09 will have on its
consolidated financial statements and related
disclosures.

In February 2016, the FASB issued Accounting
Standards Update ASU No. 2016-02, ''Leases,'' which requires an
entity that leases assets to recognize on the balance sheet the
assets and liabilities for the rights and obligations created by
those leases. Under the new guidance, a lessee will be required to
recognize assets and liabilities for leases with lease terms of
more than 12 months. Consistent with current U.S. GAAP, the
recognition, measurement, and presentation of expenses and cash
flows arising from a lease by a lessee primarily will depend on its
classification as a finance or operating lease. However, unlike
current GAAP, which requires only capital leases to be recognized
on the balance sheet, the new ASU will require both types of leases
to be recognized on the balance sheet. The standard is effective
for fiscal years beginning after December 15, 2018. Early
application is permitted. The Company is currently evaluating the
effect that ASU 2016-02 will have on its consolidated financial
statements and related disclosures.

DIRECTORS AND
EXECUTIVE OFFICERS

The following table sets forth certain information
for each director and executive officer of the Company (and persons
chosen to become such) as of April 22, 2016.

Name

Age

Position

Jay Walker

60

Executive Chairman of the Board
of Directors

Jonathan Ellenthal

50

Vice Chairman of the Board of
Directors, Chief Executive Officer

Nathaniel J. Lipman

51

Director

Richard J. Salute

70

Director

Sharon Barner

58

Director

Harvey W. Schiller, Ph.D.

75

Director

Jonathan Siegel

58

Chief Administrative Officer,
General Counsel and Secretary

Kara B. Jenny

46

Chief Financial
Officer

There are no family relationships between any of
our directors and executive officers. Set forth below are the
business backgrounds for each director and executive officer.
Innovation.

Jay S. Walker, Executive Chairman of the
Board of Directors, is chairman of Walker Digital, LLC,
(''Walker Digital'') which he founded in 1994. He is widely known
as the founder of Priceline.com, which brought a new level of value
to the travel industry and its millions of customers. Mr. Walker is
also the curator and chairman of TEDMED, a global community of
people from every field who are passionate about the future of
health and medicine (TEDMED is the sole independent licensee of the
TED organization) and acting Chief Executive Officer and
controlling investor in The Upside Commerce Group, LLC ("Upside
Holdings"), a business travel company he founded in 2015.
Concurrently, Mr. Walker is a member of several organizations that
promote innovative solutions to global problems, including The
President's Circle of the National Academies (comprising the
National Academy of Science; the National Academy of Engineering;
the Institute of Medicine; and the National Research Council); and
the Atlantic Council as a member of the Board of Directors. Mr.
Walker is also curator of a private library on the History of Human
Imagination and is actively involved with Cornell University as the
co-chairman of its Library Campaign. Mr. Walker received his
Bachelor of Arts in Industrial Relations, Cornell University, New
York, in 1978 and an Honorary Doctor of Science, Cazenovia College,
New York in 2011.

55

Jonathan Ellenthal, Vice Chairman of the
Board of Directors, Chief Executive Officer, Mr. Ellenthal
was the Chief Executive Officer of Walker Digital Management, LLC
("WDM"), a wholly-owned subsidiary of Walker Digital from 2008 -
2013. He served as a Director for many of Walker Digital's
subsidiaries and collaborated with Jay S. Walker on all new
business designs and the strategic direction of Walker Digital.
Since early 2011, Mr. Ellenthal has also been a Partner in TEDMED,
LLC ("TEDMED"). As the exclusive licensee of the globally
recognized TED brand for the field of health and medicine, TEDMED
focuses entirely on innovation and breakthrough thinking in service
of a healthier future. From 2011 to 2014, he was a member of the
Board of Directors of Affinion Group, Inc., a customer engagement
and loyalty company, with more than 70 million customers worldwide.
Mr. Ellenthal is a member of the Upside Holdings Board of Managers
and pursuant to the Upside Holding Services Agreement between the
Company and Upside Holdings, he performs certain services for
Upside Holdings.

Prior to joining Walker Digital in 2008, Mr.
Ellenthal was the Chief Executive Officer of Synapse Group, Inc., a
direct marketing subsidiary of Time Inc., and served in a variety
of senior leadership roles at Synapse before becoming CEO. Mr.
Ellenthal is a Trustee of the Wilton Family Y in Wilton,
Connecticut, and a board member of the local chapter of Young
Presidents' Organization, Inc. He holds a B.A. from Wesleyan
University in Middletown, Connecticut.

Nathaniel J. Lipman was the Executive
Chairman of Affinion Group, Inc. ("Affinion") from September 2012
to November 2015. He joined Affinion (formerly known as Cendant
Marketing Group) in June 1999 and worked in various positions,
including executive officer positions with increasing
responsibility, which culminated in his appointment as Chief
Executive Officer in October 2005. Prior to joining Affinion, Mr.
Lipman was Senior Executive Vice President, Corporate Development
and Strategic Planning for Planet Hollywood International Inc.,
Senior Vice President and General Counsel of House of Blues
Entertainment, Inc. and Senior Corporate Counsel at The Walt Disney
Company. He also worked as an attorney at Skadden, Arps, Slate,
Meagher and Flom, LLP. Mr. Lipman is currently a Director of
Novitex Holdings, Inc. and Trusted Media Brands, Inc. Additionally,
within the past five years Mr. Lipman served as a Director of
Affinion, Affinion Group Holdings, Inc. and Evertek, Inc. and
served on the Board of Managers of Upside Holdings.

Richard J. Salute, Director, has been
the Chief Financial Officer of PAXMED, Inc (a medical device
company), since June 2014. From 2004 to 2013, Mr. Salute served as
an Office Managing Partner at Cohn Reznick and served as the
Capital Markets and SEC Practice Director prior to his retirement.
Prior to 2004, Mr. Salute spent over 30 years at Andersen LLP, a
global accounting firm managing complex audits for both public and
private companies. In addition to his client responsibilities he
started three businesses for the firm: the Enterprise Group (NY
Metropolitan Area), the Technology Practice (New York Office), and
the Bankruptcy and Corporate Recovery Practice (nationwide). Mr.
Salute currently serves on the Board of Directors of Newtek
Business Services Corp. Mr. Salute holds a bachelor's of business
administration (cum laude) from Adelphi University.

Sharon Barner, Director, has been
Vice President, General Counsel, of Cummins Inc. (NYSE;CMI) since
January 30, 2012. Prior to joining Cummins, Sharon was the Deputy
Under Secretary of Commerce for Intellectual Property and Deputy
Director of the United States Patent and Trademark Office from 2009
through 2011. From 1996 to 2009 she was an attorney and partner
with the international law firm of Foley & Lardner LLP where,
among other positions, she chaired the Intellectual Property
Department and the Intellectual Property Litigation Practice Group.
She was also a member of the Executive Management Committee for the
firm from 2003 through 2009. Ms. Barner was named as one of ''The
50 Most Influential Minority Lawyers in America'' by The National
Law Journal (May 2008). Ms. Barner was also named to the list of
the top 50 women ''Super Lawyers'' in Illinois in 2006 − 2011 by
Law & Politics Media, Inc. for intellectual property litigation
work (2005 − 2011). She was also named top Intellectual Property
Lawyer in Black Enterprise Magazine in November, 2003, and top
Intellectual Property Lawyer in Diversity and the Bar in May/June,
2003. Other accolades include ''Patent Plums: Who's Enforcing the
Most Important Patents'' IP Law & Business (August 2001), and
she was featured and profiled in a 2008 story entitled ''The IP
Wild West: Sharon Barner Takes on China,'' Crain's Chicago. From
2007 through 2009, Ms. Barner served on the Board of Directors for
La Rabida Children's Hospital, Chicago, Illinois; and has been the
Chair of the Conflicts Committee since May 2012. In 1979, Ms.
Barner received bachelor of science degrees in Political Science
and in Psychology from Syracuse University and she received her
Juris Doctor from the University of Michigan Law School in
1982.

Harvey W. Schiller, Ph.D., Director,
was the Chairman of the Board and Chief Executive Officer of the
Company from June 2005 until September 2013. He is Commercial
Commissioner of America's Cup 35, Chairman of Schiller Management
Group, and Chairman of Renew Merchandise. He also serves as the
Vice Chairman and President of the Sports, Media, and Entertainment
Practice of Diversified Search, one of the top executive search
firms in the U.S. Dr. Schiller was Chairman of the Board of
privately-held GlobalOptions, Inc. between February 2004 and
September 2013. Prior to joining GlobalOptions, Dr. Schiller served
as Chairman of Assante U.S., a provider of financial and life
management products and services, from 2002 to 2004. Prior to
joining Assante, he was Chairman and Chief Executive Officer of
YankeeNets from 1999 to 2002. His previous experience includes
President of Turner Sports, Inc., Executive Director and Secretary
General of the United States Olympic Committee and Commissioner of
the Southeastern Conference. Prior to joining the United States
Olympic Committee, Dr. Schiller served for more than 25 years in
the United States Air Force, achieving the rank of Brigadier
General. Dr. Schiller currently serves on the Boards of Mesa
Airlines and the National Baseball Hall of Fame, and is a former
advisory partner of Millennium Technology Value Partners, L.P.

56

Jonathan A. Siegel, Chief Administrative
Officer, General Counsel and Secretary. Mr. Siegel joined
the Company in February 2014, prior to which he was Investment
Manager and Legal Counsel for Bentham Capital, LLC, a litigation
finance company providing funding for large commercial and patent
disputes, from March 2013 to January 2014, and a consultant from
November 2012 to February 2013. He served as Chief Administrative
Officer, General Counsel and Chief Privacy Officer of Alclear, LLC,
a biometric secure identification service, from June 2010 to June
2012. From March 2009 to April 2011 he served as Mayor of
Irvington, New York and served as Trustee of Irvington prior to his
election as Mayor. From December 1999 to January 2008, Mr. Siegel
was employed by Synapse Group, Inc., a direct marketing subsidiary
of Time Inc., most recently as Executive Vice President Publisher
Relations and Legal Affairs. From 1994 to 1999 he served in various
capacities for Brandt, Inc, a manufacturer of currency counting
equipment, including as Executive Vice President and General
Counsel and member of the Board of Directors. Mr. Siegel was Vice
President and Associate General Counsel of Trian Group, LP, a
merchant bank, from 1987 to 1994. He was a corporate associate at
Rosenman & Colin LLP from 1983 to 1987. He received his BA from
Colgate University in 1979 and his JD from The University of
Chicago Law School in 1983. He is admitted to practice in New York.
Pursuant to the Upside Holding Services Agreement between the
Company and Upside Holdings, Mr. Siegel performs certain services
for Upside Holdings.

Kara B. Jenny, Chief Financial
Officer. Ms. Jenny joined the Company in May 2014, prior to
which she was the Chief Financial Officer of Fashion to Figure, a
leading specialty retailer founded to create the ultimate
full-fashion experience, which she joined in March 2013. Prior to
Fashion to Figure, Ms. Jenny was with Bluefly.com, an online retail
destination offering exclusive designer merchandise at a value,
from May 1999 until December 2012. Ms. Jenny served as Bluefly's
Chief Financial Officer for five years and had previously served as
Vice President of Finance prior to her promotion to Chief Financial
Officer. Ms. Jenny began her career at Arthur Andersen LLP, and is
a certified public accountant and a member of the American
Institute of Certified Public Accountants. She received her B.S. in
Accounting from Binghamton University. Pursuant to the Upside
Holding Services Agreement between the Company and Upside Holdings,
Ms. Jenny performs certain services for Upside Holdings.

Director Experience, Qualifications, Attributes
and Skills

We believe that the backgrounds and qualifications
of our Directors, considered as a group, should provide a composite
mix of experience, knowledge and abilities that will allow the
Board of Directors to fulfill its responsibilities. The Board of
Directors is composed of a diverse group of leaders in their
respective fields. Our Directors have other experience that makes
them valuable members, such as prior public policy experience or
regulatory experience that provides insight into issues faced by
companies.

·

Jay S. Walker. The Board believes that
Mr. Walker will provide the Board, by virtue of his extensive
experience as an innovator and entrepreneur, with valuable industry
insight, leadership and business knowledge.

·

Jonathan Ellenthal. The Board
believes that Mr. Ellenthal's strategic vision and ability to
realize new business avenues will be vital to the success of future
Company initiatives.

·

Nathaniel J. Lipman. The Board
believes that Mr. Lipman's executive leadership experiences will
provide the Board with a crucial perspective on the fruition of
future business opportunities.

·

Richard J. Salute. The Board
believes that, as a result of Mr. Salute's financial background, as
well as his service of publicly traded companies as an Audit
Partner in both national and internationally recognized firms, he
possesses a valuable ability to assess financial issues in a highly
competitive business atmosphere. The Board made a qualitative
assessment of Mr. Salute's level of knowledge and experience based
on a number of factors, including his experience as a former Audit
Partner reporting companies and financial sophistication from his
over forty years of finance experience.

·

Sharon Barner. The Board believes
that Ms. Barner's intellectual property law background, including
her service as Deputy Under Secretary of Commerce for Intellectual
Property and as Deputy Director of the United States Patent and
Trademark Office, will provide the Board with valuable insight with
respect to patent and patent-enforcement matters.

·

Harvey W. Schiller, Ph.D. The
Board believes that, from his military career and as an executive
of numerous entities, Dr. Schiller brings to the Board strong
leadership and organizational skills and a deep commitment to
integrity and excellence.

Involvement in Certain Legal Proceedings

None of our executive officers or directors has,
during the past ten years:

(a)

Had any bankruptcy petition
filed by or against any business of which such person was a general
partner or executive officer either at the time of the bankruptcy
or within two years prior to that time;

(b)

Been convicted in a criminal
proceeding or subject to a pending criminal proceeding;

(c)

Been subject to any order,
judgment, or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting
his involvement in any type of business, securities, futures,
commodities or banking activities; or

57

(d)

Been found by a court of
competent jurisdiction (in a civil action), the Securities and
Exchange Commission or the Commodity Futures Trading Commission to
have violated a federal or state securities or commodities law, and
the judgment has not been reversed, suspended, or
vacated.

Each of our directors has been appointed for a
one-year term to hold office until the next annual general meeting
of our stockholders or until he or she resigns or is removed from
office in accordance with our Bylaws and the provisions of the
Delaware General Corporation Law. Each of our executive officers
has been appointed by our Board of Directors and will hold office
until he or she resigns or is removed by the Board of Directors in
accordance with the respective employment agreements of the
officers and our Bylaws and the provisions of the Delaware General
Corporation Law.

EXECUTIVE
COMPENSATION

The following table sets forth the cash and other
compensation paid by us to certain of our executive officers, whom
we collectively refer to as the ''named executive officers'', for
the periods indicated. No other executive officer received total
compensation greater than $100,000 in 2015.

Name and Principal Position

Year

Salary
($)

Bonus
($)

Stock
Awards
($)

Option
Awards
($) (1)

All Other
Compensation
($)

Total
($)

Jonathan Ellenthal,

2015

400,000

-

-

164,603

-

564,603

Chief Executive Officer

2014

400,000

113,973

-

-

-

513,973

Jonathan Siegel,

2015

350,000

-

-

60,302

-

410,302

Chief Administrative Officer, General Counsel and
Secretary (2)

2014

307,591

-

-

1,049,750

-

1,357,341

Kara Jenny,

2015

329,000

48,939

-

-

-

377,939

Chief Financial Officer (3)

2014

196,959

-

-

620,000

-

798,959

(1)

Reflects the aggregate grant date fair value of stock options
granted in the respective fiscal year to the Named Executive
Officers computed in accordance with ASC Topic 718.

(2)

Mr. Siegel became Chief Administrative Officer, General Counsel
and Secretary when he joined the Company in February 2014. Mr.
Siegel's annual salary is $350,000.

(3)

Ms. Jenny became Chief Financial Officer when she joined the
Company in May 2014. Ms. Jenny has an annual salary of
$329,000.

We have entered into an employment agreement and
non-competition and confidentiality agreement with Jonathan
Ellenthal, our Chief Executive Officer. Pursuant to that employment
agreement, Mr. Ellenthal is entitled to an annual base salary
of $400,000, an annual bonus opportunity with a target of 100% of
his annual base salary and options to purchase 1,000,000 shares of
our common stock pursuant to our Incentive Plan.

We have entered into an employment agreement and
non-competition and confidentiality agreement with Kara Jenny, our
Chief Financial Officer. Pursuant to that employment agreement,
Ms. Jenny is entitled to an annual base salary of $329,000, an
annual bonus opportunity with a target of 30% of her annual base
salary and options to purchase 300,000 shares of our common stock
pursuant to our Incentive Plan.

We have entered into an employment agreement and
non-competition and confidentiality agreement with Jonathan Siegel,
our Chief Administrative Officer, General Counsel and Secretary.
Pursuant to that employment agreement, Mr. Siegel is entitled
to an annual base salary of $350,000, an annual bonus opportunity
with a target of 50% of his annual base salary and options to
purchase 500,000 shares of our common stock pursuant to our
Incentive Plan.

Stock-Based Compensation Plans

The Company's Board of Directors has adopted a
stock-based compensation plan, the Amended and Restated 2015
Long-Term Incentive Plan (the "Incentive Plan"). The Incentive
Plan, which provide for the granting of restricted stock awards,
deferred stock unit awards, stock option awards and other equity
and cash awards, was adopted for the purpose of encouraging key
employees, consultants and directors who are not employees to
acquire a proprietary interest in the growth and performance of the
Company. The Compensation Committee had the authority to determine
the amount, type and terms of each award, but may not grant awards
under the Incentive Plan, in any combination, for more than
1,000,000 shares of the Company's common stock to any individual
during any calendar year.

As of April 22, 2016, 559,176 shares of common
stock remain eligible to be issued under the Incentive Plans.

58

Outstanding Equity Awards at Fiscal
Year-End

The following table presents information regarding
unexercised option awards for each named executive officer as of
the end of the fiscal year ended December 31, 2015:

Name

Number of Securities
Underlying Unexercised
Options (#) Exercisable

Number of Securities
Underlying
Unexercised Options
(#) Unexercisable

Option Exercise
Price ($)

Option
Expiration Date

Jonathan Ellenthal

666,666

333,334

$

4.05

11/15/2023

200,000

1.04

5/05/2025

Jonathan Siegel

141,666

283,334

3.60

2/12/2024

75,000

1.37

2/14/2025

Kara Jenny

100,000

200,000

3.20

5/27/2024

Additionally, we have entered into agreements with
certain of our current directors and officers pursuant to which we
have agreed to issue options to them. We received shareholder
approval to increase the number of shares of our common stock
available for issuance under the Incentive Plan prior to issuing
these options. The following table contains information about our
common stock that may be issued under our equity compensation plans
as of December 31, 2015:

Equity Compensation Plan Information

Plan category

Number of securities to
be issued upon exercise
of outstanding options
(a)

Weighted-average
exercise price of
outstanding options
(b)

Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding
securities reflected in
column (a))
(c)

Equity compensation plans approved by security
holders (1)

4,263,166

$

3.01

1,344,176

(2)

Equity compensation plans not approved by security
holders

-

-

-

Total

4,263,166

$

3.01

1,344,176

(1)

Our Incentive Plan was adopted on May 6, 2015.

(2)

The number of securities remaining available for future
issuances includes 1,344,176 shares available under our Incentive
Plan.

DIRECTOR
COMPENSATION

The following summary describes compensation for
non-employee Directors.

In September 2013, the Board of Directors adopted
the Board Compensation Plan pursuant to which certain members of
our Board are entitled to receive compensation. The Board
Compensation Plan, as amended November 2014 and November 2015 is
set forth below.

59

Annual Cash Retainer (payable quarterly):

Executive Chairman

January 1, to December 31, 2015:

$

150,000

Fiscal 2016 and subsequent years:

$

0

Board Member (Independent)

$

50,000

Board Member (Non-management and Not
Independent)

$

50,000

Supplemental Fees for Committee Members and
Chairs:

Executive Committee Member (Independent)

January 1, to December 31, 2015:

$

75,000

Fiscal 2016 and subsequent years:

$

0

Audit Committee Chair (Independent)

$

25,000

Committee Member (Independent)

$

10,000

Committee Member (Non-management and Not
Independent)

$

10,000

If the Company holds Board or Committee meetings in
addition to the quarterly meetings, independent and non-management
members will be compensated $2,500 for in-person attendance and
$1,000 for telephonic attendance at such additional meetings.

The Annual Cash Compensation retainer payments are
payable in equal quarterly installments. Additionally, the Annual
Cash Compensation retainer payments are paid pro-rata from a
director's date of appointment to the Board until the next Annual
Meeting of Stockholders.

One-Time Stock Option Grants (to be granted upon
joining the Board of Directors):

Board Member
(Independent)

50,000 shares of Common
Stock

Executive Committee Member
(Independent)

100,000 shares of Common
Stock

Committee Chair
(Independent)

20,000 shares of Common
Stock

Expense Reimbursement Policy:

The Company shall reimburse its independent,
non-management Board members for ordinary and necessary out of
pocket expenses (e.g., travel, hotel, and meals) incurred in
connection with Board activities.

Management Directors:

Directors who are employees of the Company receive
no additional compensation for service as Directors. Mr. Ellenthal
is the only Director of the Company who is also an employee.

These amounts represent the
Annual Cash Retainer for Board Service and the Supplemental Fees
for Committee Members and Chairs.

60

SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The Company has two classes of stock outstanding,
its Common Stock and its Series B Convertible Preferred Stock.
Shares of Series B Convertible Preferred Stock are convertible on a
one-for-one basis into shares of our Common Stock. The holders of
the Company's Common Stock are entitled to one vote per share of
Common Stock held on all matters submitted to a vote of
stockholders, and holders of Series B Convertible Preferred Stock
are entitled to cast an aggregate of 80% of the total votes that
may be cast on all matters presented to the stockholders. The
holders of the our Common Stock have equal rights to receive
dividends, when and if declared by our Board of Directors, out of
funds legally available for such purpose, and holders of our Series
B Convertible Preferred Stock will receive the equivalent amount of
any dividends as the holders of our Common Stock, on an as
converted basis. In the event of liquidation, holders of our Common
Stock are entitled to share ratably in our net assets available for
distribution to stockholders, and holders of Series B Convertible
Preferred Stock will receive the equivalent amount of liquidation
proceeds as the holders of our Common Stock, on an as converted
basis. The table below sets forth the number and percentage of
shares of our Common Stock owned as of, April 5, 2016, by the
following persons: (i) stockholders known to us who own 5% or more
of our outstanding shares, (ii) each of our Directors and named
executive officers, and our Directors and named executive officers
as a group.

Except as otherwise set forth below, the address of
each of the persons listed below is Walker Innovation Inc., Two
High Ridge Park, Stamford, CT 06905. Unless otherwise indicated,
the Common Stock beneficially owned by a holder includes shares
owned by a spouse, minor children and relatives sharing the same
home, as well as entities owned or controlled by the named person,
and also includes options to purchase shares of our Common Stock
exercisable within 60 days that have been granted under our
incentive stock plans.

Title of Class

Name of Beneficial Owner

AmountBeneficiallyOwned(1)

Percent
of Class

Common Stock

Walker Digital, LLC

29,405,261

(2)

82.3

%

Series B Convertible Preferred Stock

Walker Digital, LLC

14,999,000

(3)

100.0

%

Common Stock

Genesis Capital Advisors, LLC

3,244,358

(4)

3.1

%

Common Stock

IP Navigation Group LLC

1,445,000

(5)

1.4

%

Common Stock

Del Mar Asset Management LP

2,685,567

(6)

2.4

%

Common Stock

Jay S. Walker

29,504,271

(7)

82.6

%

Series B Convertible Preferred Stock

Jay S. Walker

14,999,000

(7)

100.0

%

Common Stock

Jonathan Ellenthal

805,157

(8)

0.8

%

Common Stock

Jonathan A. Siegel

483,333

(9)

0.5

%

Common Stock

Kara B. Jenny

375,000

(10)

0.4

%

Common Stock

Sharon Barner

41,666

(11)

*

Common Stock

Nathaniel J. Lipman

125,000

(12)

0.1

%

Common Stock

Richard J. Salute

23,333

(13)

*

Common Stock

Harvey W. Schiller

514,486

(14)

0.5

%

Common Stock

All Directors and Named Executive Officers as a
group (8 persons)

31,872,246

(15)

84.8

%

*

Less than 0.1%.

(1)

The number of shares of Common
Stock includes shares owned and exercisable options (including
options that will be exercisable within 60 days after April 5, 2016
(i.e. by , June 4, 2016).

(2)

Includes shares owned
beneficially or deemed to be owned beneficially by Walker Digital,
LLC and with respect to which may be deemed to have shared voting
and investment power with Jay S. Walker as follows:

(a)

2,358,500 shares of Common
Stock; and

(b)

14,999,000 shares of Series B
Convertible Preferred Stock, which are convertible at the option of
the holder thereof, at any time and from time to time, into an
equal number of shares of our Common Stock. As a result, of the
voting power of the Series B Convertible Preferred Stock, Walker
Digital, LLC may be deemed to beneficially own an additional
12,047,762 shares of Common Stock due to the
voting power conferred upon such holder by the Series B Convertible
Preferred Stock it holds.

(3)

Each share of Series B
Convertible Preferred Stock, is convertible at the option of the
holder thereof, at any time and from time to time, into one share
of Common Stock. All shares of Series B Convertible Preferred Stock
will vote together with the Common Stock on all matters to which
stockholders are entitled to vote. The holder of the Series B
Convertible Preferred Stock is entitled to cast 80% of the total
votes that may be cast with respect to any such matter.

(4)

Based on a Schedule 13G/A filed
by Genesis Capital Advisors LLC and Genesis Opportunity Fund, LP on
February 16, 2016. Represents 1,535,529 shares of Common Stock held
by Genesis Opportunity Fund, L.P. and 173,300 shares of Common
Stock beneficially owned by Genesis Capital Advisors LLC, which is
the investment manager of Genesis Opportunity Fund, L.P.. As set
forth in the Schedule 13G/A each of Genesis Capital Advisors, LLC
and Genesis Opportunity Fund, LP have disclaimed beneficial
ownership of such securities except to the extent of their
pecuniary interest therein. The business address of Genesis Capital
Advisors LLC is 1212 Avenue of the Americas, 19th Floor, New York,
NY 10036.

Based upon a Schedule 13G and a
Form 4 filed by Del Mar Asset Management, LP on February 24 and 26,
2014, respectively. Represents 2,098,900 shares of Common Stock
held by Del Mar Master Fund, Ltd., a Cayman Islands exempted
company (the ''Master Fund'') and 458,863 shares of Common Stock
held by RockMaple Concetrated Alpha Trust, a Cayman Islands exempt
company (''RockMaple''). David Freelove is the managing member of
Del Mar Management, LLC, a Delaware limited liability company (the
''GP''). The GP is the general partner of Del Mar Asset Management,
LP, a Delaware limited liability company (''DMAM''), and as such,
directs DMAM's operations. DMAM serves as the investment manager of
the Master Fund. Mr. Freelove has sole voting or investment control
over shares held by RockMaple. The business address of Del Mar
Asset Management, LP is One Grand Central Place, 60 East 42nd
Street, Suite 450, New York, NY 10165.

(7)

Includes shares owned
beneficially or deemed to be owned beneficially by Jay S. Walker as
follows:

(a)

287,295 shares of Common Stock
directly and with respect to which he has sole voting and
investment power; and

(b)

2,358,500 shares of Common Stock and 14,999,000
shares of Series B Convertible Preferred Stock, which are
convertible at the option of the holder thereof, at any time and
from time to time, into an equal number of shares of our Common
Stock with respect to which may be deemed to have shared voting and
investment power with Walker Digital,
LLC. As a result of the voting power of the Series B
Convertible Preferred Stock, Walker Digital,
LLC may be deemed to beneficially own an additional
12,047,762 shares of Common Stock due to the
voting power conferred upon such holder by the Series B Convertible
Preferred Stock it holds.

(8)

Includes shares owned
beneficially or deemed to be owned beneficially by Jonathan
Ellenthal as follows:

(a)

71,825 shares of Common Stock
directly and with respect to which he has sole voting and
investment power;

(b)

733,332 shares of Common Stock
underlying stock options; and

(c)

excludes Mr. Ellenthal's 5% ownership in Walker
Digital, LLC.

(9)

Represents shares of Common
Stock underlying stock options owned beneficially or deemed to be
owned beneficially by Jonathan A. Siegel.

(10)

Represents shares of Common
Stock underlying stock options owned beneficially or deemed to be
owned beneficially by Kara B. Jenny.

(11)

Represents shares of Common
Stock underlying stock options owned beneficially or deemed to be
owned beneficially by Sharon Barner.

(12)Represents shares of Common
Stock underlying stock options owned beneficially or deemed to be
owned beneficially by Nathaniel J. Lipman.

(13)Represents shares of Common
Stock underlying stock options owned beneficially or deemed to be
owned beneficially by Richard J. Salute.

(14)

Includes shares owned
beneficially or deemed to be owned beneficially by Harvey W.
Schiller as follows:

(a)

381,163 shares of Common Stock
directly and with respect to which he as sole voting and investment
power; and

(b)

133,333 shares of Common Stock
underlying stock options.

(15)

See notes (1) and (7) through (14).

Change of Control

We are not aware of any person who owns of record,
or is known to own beneficially, five percent or more of our
outstanding securities of any class, other than as set forth
above.

62

CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS

On July 11, 2013, in connection with the
Merger, we entered into a Shared Services Agreement with Walker
Digital Management, LLC, a wholly-owned subsidiary of Walker
Digital, which became effective at the closing of the Merger,
whereby Walker Digital Management, LLC provides certain services to
us. Walker Digital Management, LLC provides such services at
cost.

The Company has a Shared Services Agreement with
WDM ("WDM Shared Services Agreement"). The cost of such services
varies monthly based on the terms of the WDM Shared Services
Agreement. The incurred expenses include but are not limited to
executive compensation, information technology services and
supplies, administrative and general services and supplies and rent
and utilities, are based either on specific attribution of those
expenses or, where necessary and appropriate, based on the
Company's best estimate of an appropriate proportional
allocation.

On December 4, 2015, the Company entered into the
Upside Holdings Services Agreement with Upside Holdings, a company
controlled by Mr. Walker and affiliated with Walker Digital, the
Company's controlling stockholder, regarding the provision of
executive management, marketing, legal and financial consulting
services. There are no set deliverables contemplated by the Upside
Holdings Services Agreement, although the hourly rates the Company
charges Upside Holdings (approximately equal to the Company's cost)
are specified. In connection with the Upside Holdings Services
Agreement, the Company was granted a warrant to purchase limited
liability interests at a price of $0.06 per Class A Common Share in
Upside Holdings. The warrant was issued to the Company by Mr.
Walker, who currently beneficially owns approximately 76% of the
aggregate outstanding limited liability company interests of Upside
Holdings.

Code of Ethics

To ensure, among other things, that potential
conflicts of interest are avoided or declared, we have adopted a
Code of Ethics applying to all of our Directors, officers and
employees. The Code of Ethics is reasonably designed to deter
wrongdoing and promote (i) honest and ethical conduct, including
the ethical handling of actual or apparent conflicts of interest
between personal and professional relationships, (ii) full, fair,
accurate, timely and understandable disclosure in reports and
documents filed with, or submitted to, the Commission and in other
public communications made by us, (iii) compliance with applicable
governmental laws, rules and regulations, (iv) the prompt internal
reporting of violations of the Code of Ethics to appropriate
persons identified in the Code of Ethics, and (v) accountability
for adherence to the Code of Ethics. A copy of the Code of Ethics
is available at the Company's website
www.walkerinnovation.com by clicking on the ''Investor
Relations'' and then ''Corporate Governance''. Stockholders may
also obtain a hard copy of these documents without charge from us
by writing to Jonathan A. Siegel, Secretary, Walker Innovation
Inc., Two High Ridge Park, Stamford, CT 06905 or by calling the
Company at (203) 461-7200.

Policy and Procedures for the Review of Related
Person Transactions

Pursuant to its charter, the Audit Committee is
responsible for approving all related-party transactions as defined
under Item 404 of Regulation S-K, after reviewing each such
transaction for potential conflicts of interest and other
improprieties.

Board Independence Standards for
Directors

To be considered ''independent'' for purposes of
membership to the Company's Board of Directors, the Board must
determine that a Director has no material relationship to the
Company, including any of its subsidiaries, other than as a
Director. For each Director, the Board broadly considers all
relevant facts and circumstances. In making its determination, the
Board considers the following categories of relationships to be
material, thus precluding a determination that a Director is
''independent''. The Board reviews at least annually whether
Directors meet these Director Independence Standards.

The Board has determined that each of Mr. Lipman,
Ms. Barner and Mr. Salute is ''independent'' under the independence
standards of NASDAQ and applicable Commission rules.

In addition to the foregoing, in order to be
considered ''independent'' under NASDAQ rules for purposes of
serving on the Company's Audit Committee or Compensation Committee,
a Director also may not accept, directly or indirectly, any
consulting, advisory or other compensatory fee from the Company,
other than as a Director, and may not be an ''affiliated person''
of the Company. Audit Committee members may receive Directors' fees
and fixed payments for prior service with the Company. The Board
has determined that each member of the Audit Committee and each
independent member of the Compensation Committee meets these
additional independence requirements.

63

Committees of the Board of Directors and
Director Independence

Our Board has an Audit Committee, a Compensation
Committee, an Executive Committee and a Nominating Committee. The
current members of the committees are set forth in the following
table:

Director

AuditCommittee

CompensationCommittee

ExecutiveCommittee

NominatingCommittee

Jay S. Walker

Chair

Chair

Chair

Jonathan Ellenthal

a

a

Nathaniel J. Lipman

a

a

Richard J. Salute

Chair

Sharon Barner

a

a

Harvey W. Schiller,
Ph.D.

a

a

The Board has adopted a written charter for each of
these committees, which is available at the Company's website
www.walkerinnovation.com by clicking on the ''Investor
Relations'' and then ''Corporate Governance''. Stockholders may
also obtain a hard copy of these documents without charge from us
by writing or calling: Jonathan A. Siegel, Secretary, Walker
Innovation Inc., Two High Ridge Park, Stamford, CT 06905; Tel:
(203) 461-7200.

The Audit Committee

Primary Responsibilities: The Audit
Committee oversees our accounting, financial reporting process,
internal controls and audits, and consults with management and our
independent registered public accounting firm on, among other
items, matters related to the annual audit, the published financial
statements and the accounting principles applied. As part of its
duties, the Audit Committee appoints, evaluates and retains our
independent registered public accounting firm. It maintains direct
responsibility for the compensation, termination and oversight of
our independent registered public accounting firm and evaluates its
qualifications, performance and independence. The committee also
monitors compliance with our policies on ethical business practices
and reports on these items to the Board. The Audit Committee has
established policies and procedures for the pre-approval of all
services provided by our independent registered public accounting
firm. Our Audit Committee is currently comprised of Messrs Salute
and Lipman and Ms. Barner; Mr. Salute is the Chairman of the
committee.

Independence: Each member of the Audit
Committee meets the independence requirements as defined by the
rules of NASDAQ and the Securities Exchange Act of 1934 (the
''Exchange Act''). Each member of the Audit Committee is
financially literate, knowledgeable and qualified to review
financial statements. The Board has determined that Mr. Salute, is
an ''Audit Committee financial expert,'' as defined under the
Exchange Act, and is independent as defined by the rules of
NASDAQ.

The Compensation Committee

Primary Responsibilities: The Compensation
Committee determines all compensation for our Chief Executive
Officer; reviews and approves corporate goals relevant to the
compensation of our Chief Executive Officer and evaluates our Chief
Executive Officer's performance in light of those goals and
objectives; reviews and approves objectives relevant to other
executive officers' compensation; reviews and approves the
compensation of other executive officers in accordance with those
objectives; administers our stock option plans; approves severance
arrangements and other applicable agreements for executive
officers; and consults generally with management on matters
concerning executive compensation and on pension, savings and
welfare benefit plans where Board or stockholder action is
contemplated with respect to the adoption of or amendments to such
plans. Our Compensation Committee is comprised of Mr. Walker, Ms.
Barner and Dr. Schiller.

Independence: Because the Company is a
''controlled company'' under NASDAQ rules the Company has decided
to avail itself of the NASDAQ controlled company exemption
pertaining to Compensation Committee membership.

The Executive Committee

Primary Responsibilities: The Executive
Committee exercises all the powers of the Board of Directors in the
management of the business and affairs of the Company between
meetings of the Board of Directors, to the fullest extent permitted
under Delaware law. Our Executive Committee is comprised of Messrs
Walker, Ellenthal and Lipman.

64

The Nominating Committee

Primary Responsibilities: The Nominating
Committee considers and makes recommendations on matters related to
the practices, policies and procedures of the Board and takes a
leadership role in shaping our corporate governance. As part of its
duties, the committee assesses the size, structure and composition
of the Board and its committees, coordinates evaluation of Board
performance and reviews Board compensation. The committee also acts
as a screening and nominating committee for candidates considered
for election to the Board. In this capacity it concerns itself with
the composition of the Board with respect to depth of experience,
balance of professional interests, required expertise and other
factors. The committee evaluates prospective nominees identified on
its own initiative or referred to it by other Board members,
management, stockholders or external sources and all self-nominated
candidates. The committee makes recommendations on organization,
succession, consultantships and similar matters where Board
approval is required. Our Nominating Committee is comprised of Mr.
Walker, Mr. Ellenthal and Dr. Schiller.

The Nominating Committee, among other things,
recommends nominees for election as members of the Board; considers
and makes recommendations regarding Board practices and procedures;
and considers corporate governance issues that arise from time to
time and develops appropriate recommendations for the Board
regarding such matters.

Each committee reports regularly to the Board and
has the authority to engage its own advisors.

Compensation Committee Interlocks and Insider
Participation

With the exception of Dr. Schiller, who was our
Chief Executive Officer and Chairman prior to the Merger (as
defined below), and Mr. Walker, who is currently our Executive
Chairman of the Board of Directors, there is no other member of our
Compensation Committee who at any time has been an officer or
employee of ours or our subsidiaries, or who had any relationship
requiring disclosure as a related party transaction. No
interlocking relationship exists between our Board of Directors or
Compensation Committee and the Board of Directors or Compensation
Committee of any other company, nor has any interlocking
relationship existed in the past.

As noted above, Mr. Walker's affiliated
entity, Walker Digital Management, LLC, which is a wholly-owned
subsidiary of Walker Digital, entered into a Shared Services
Agreement with us on July 11, 2013, in connection with the
Merger.

INTEREST OF NAMED
EXPERTS AND COUNSEL

No expert or counsel named in this prospectus as
having prepared or certified any part of this prospectus or having
given an opinion upon the validity of the securities being
registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a
contingency basis, or had, or is to receive, in connection with the
offering, a substantial interest, direct or indirect, in the
registrant or any of its parents or subsidiaries. Nor was any such
person connected with the registrant or any of its parents or
subsidiaries as a promoter, managing or principal underwriters,
voting trustee, director, officer, or employee.

The consolidated financial statements of Walker
Innovation Inc. and Subsidiaries as of December 31, 2015 and
2014 have been included in this prospectus in reliance upon the
report of Marcum LLP, an independent registered public accounting
firm, appearing in the documents incorporated by reference herein,
given upon the authority of said firm as experts in accounting and
auditing.

The validity of the securities offered hereby and
certain legal matters in connection this registration statement
have been passed upon by the law firm Loeb & Loeb LLP.

WHERE YOU MAY
FIND MORE INFORMATION

We are subject to the informational requirements of
the Exchange Act. Accordingly, we file annual, quarterly and
special reports, proxy statements and other information with the
SEC. You may read and copy any document that we file at the SEC's
public reference room at 100 F Street, NE, Washington, DC 20549.
Information about the operation of the public reference room may be
obtained by calling the SEC at 1-800-SEC-0330. Our SEC filings are
also available to you free of charge at the SEC's web site at
http://www.sec.gov.

You can read and print press releases, financial
statements, our most recent annual and quarterly reports and
additional information about us, free of charge, at our web site at
http://www.walkerinnovation.com.

This prospectus is a part of a registration
statement on Form S-1 filed by us with the SEC under the Securities
Act. This prospectus does not contain all of the information set
forth in the registration statement, certain parts of which are
omitted in accordance with the rules and regulations of the SEC.
For further information with respect to us and the shares of our
common stock offered hereby, please refer to the registration
statement. The registration statement may be inspected at the
public reference facilities maintained by the SEC at the addresses
set forth above. Statements in this prospectus about any document
filed as an exhibit are not necessarily complete and, in each
instance, you should refer to the copy of such document filed with
the SEC. Each such statement is qualified by such reference.

65

DISCLOSURE OF
COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES

Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors,
officers or persons controlling the registrant pursuant to the
foregoing provisions, the registrant has been informed that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.

66

8,856,463 shares of Common Stock

PRELIMINARY PROSPECTUS

April 25, 2016

PART II - INFORMATION NOT REQUIRED IN
PROSPECTUS

Item 13. Other Expenses of Issuance and
Distribution.

Expenses estimated to be incurred by Walker
Innovation Inc. for the issuance and distribution of this
prospectus are as follows:

SEC registration fee

$

2,735.28

Printing and reproduction costs

$

10,000.00

Legal and accounting fees and expenses

$

35,000.00

Total

$

47,735.28

Item 14. Indemnification of Directors and
Officers.

Delaware General Corporation Law

Subsection (a) of Section 145 of the Delaware
General Corporation Law (the "DGCL") provides that a corporation
may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was
unlawful. Section 145 of the DGCL further provides that a
corporation similarly may indemnify any such person serving in any
such capacity who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor,
against expenses (including attorneys' fees) actually and
reasonably incurred in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests
of the corporation and except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless and
only to the extent that the Delaware Court of Chancery or such
other court in which such action or suit was brought shall
determine upon application that, despite the adjudication of
liability but in view of all of the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem
proper.

Certificate of Incorporation

Under our Certificate of Incorporation, every
director, officer or employee of the Registrant shall be
indemnified by the Registrant against all expenses and liabilities,
including counsel fees, reasonably incurred by or imposed upon him
in connection with any proceeding to which he may be made a party,
or in which he may become involved, by reason of his being or
having been a director, officer or employee of the Registrant, or
any settlement thereof, whether or not he is a director, officer or
employee at the time such expenses are incurred or liability
incurred, except in such cases where the director, officer or
employee is adjudged guilty of willful misfeasance or malfeasance
in the performance of his duties; provided that in the event of a
settlement the indemnification shall apply only when the board of
directors approves such settlement and reimbursement as being for
the best interests of the Registrant. In addition, no person shall
be personally liable to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director;
provided, however, that this does not eliminate or limit the
liability of a director (i) for any breach of the director's duty
of loyalty to the Registrant or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the DGCL,
or (iv) for any transaction from which the director derived an
improper personal benefit. If the DGCL is amended to authorize
corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the
Registrant will be eliminated or limited to the fullest extent
permitted by the DGCL, as so amended.

67

By-laws

Pursuant to the By-laws of the Registrant, any
person who was or is made a party, or is threatened to be made a
party to, or is involved in any action, suit, or proceeding,
whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he or she, or a person of
whom he or she is the legal representative, is or was a director,
officer, employee or agent of the Registrant, or is or was serving
at the request of the Registrant, as a director, officer or
employee or agent of another corporation or of a partnership, joint
venture, trust or other enterprise, including service with respect
to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer,
employee or agent or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held
harmless by the Registrant to the fullest extent authorized by the
DGCL as the same exists or may hereafter be amended (but, in the
case of any such amendment, only to the extent that such amendment
permits the Registrant to provide broader indemnification rights
than said law permitted the Registrant to provide prior to such
amendment) and in the manner provided in the Certificate of
Incorporation of the Registrant and as otherwise permitted by the
DGCL.

Indemnification Agreements

As permitted under Delaware law, the Registrant has
agreements whereby its officers and directors are indemnified for
certain events or occurrences while the officer or director is, or
was serving, at the Registrant's request in such capacity. The term
of the indemnification period is for the officer's or director's
term in such capacity and thereafter for so long as the officer or
director is subject to any proceeding.

Item 15. Recent Sales of Unregistered
Securities.

On the Closing Date, the Registrant issued to
Walker Digital 7,667,667 shares of the Registrant's common stock
and 14,999,000 shares of Series B Convertible Preferred Stock
resulting in Walker Digital receiving approximately 37% of the
issued and outstanding shares of our common stock and all of our
issued and outstanding shares of Series B Convertible Preferred
Stock. Each share of Series B Convertible Preferred Stock may be
converted into one share of common stock at any time and from time
to time. The Registrant relied on Section 4(a)(2) of the Securities
Act of 1933, as amended, in connection with the sale of such shares
of common stock and shares of Series B Convertible Preferred Stock
to Walker Digital, as such sales were not in connection with a
public offering.

On July 10, 2013, the Registrant issued to
Broadband Capital Management, LLC ("BCM") 1,325,776 shares of
restricted common stock as consideration for BCM's services in
connection with the Merger. The common stock vested on the Closing
Date. The Registrant relied on Section 4(a)(2) of the Securities
Act of 1933, as amended, in connection with the sale of such
1,325,776 shares of common stock to BCM, as such sale was not in
connection with a public offering. On July 10, 2013, in connection
with the issuance of 1,325,776 shares of restricted common stock to
BCM, the Registrant's Board of Directors determined that BCM will
not be deemed to be an "Acquiring Person" for the purposes of the
Rights Agreement, unless and until BCM becomes the "Beneficial
Owner" (as defined under the Rights Agreement) of more than 20% of
the Registrant's outstanding common stock. The Rights Agreement was
terminated immediately prior to the closing of the Merger.

On July 11, 2013, in recognition of their service
to the Registrant, the Registrant entered into amendments to each
of Dr. Harvey Schiller's and Mr. Jeffrey O. Nyweide's employment
agreements, to provide that upon the closing of the Merger the
Registrant would issue to each of Dr. Schiller and Mr. Nyweide
100,000 shares of common stock and 83,334 shares of common stock,
respectively. Such shares were issued upon the closing of the
Merger. The Registrant relied on Section 4(a)(2) of the Securities
Act of 1933, as amended, in connection with the sales of such
100,000 shares of common stock and 83,334 shares of common stock,
to each of Dr. Schiller and Mr. Nyweide, respectively, as such
sales were not in connection with a public offering.

On the Closing Date, in connection with the
amendment of a service agreement with IP Navigation pursuant to
which IP Navigation reduced its future fees, the Registrant issued
1,445,000 shares of common stock to IP Navigation. The Registrant
relied on Section 4(a)(2) of the Securities Act of 1933, as
amended, in connection with the sale of such shares of common stock
to IP Navigation, as such sale was not in connection with a public
offering.

Substantially simultaneously with the closing of
the Merger, the Registrant completed the closing of the Placement
of units, each consisting of one newly issued share of common stock
and one warrant to purchase half a share of newly issued common
stock, at the price of $3.00 per unit, to unaffiliated, accredited
third parties. The investors in the Placement collectively
purchased 3,960,615 shares of common stock and warrants to purchase
1,980,318 shares of common stock for total cash consideration of
$11,881,847. The Warrants issued to the investors are exercisable
for a period of three years at a purchase price of $3.00 per share
of the Registrant's common stock and are subject to a call option
in favor of the Registrant. The Placement was made to a limited
number of Accredited Investors and was deemed to be exempt from
registration under Section 4(a)(2) of the Securities Act.

68

Item 16. Exhibits.

(a)

The following exhibits are filed as a part of, or
incorporated by reference into, this Registration Statement:

ExhibitNo.

Description

2.1

Agreement and Plan of Merger, dated July 11,
2013, by and among GlobalOptions Group, Inc., GO Merger Sub, LLC,
Walker Digital, LLC and Walker Digital Holdings, LLC (filed as
Exhibit 2.1 to our Current Report on Form 8-K filed on July 15,
2013).*

2.2

Amendment to Agreement and Plan of Merger
dated as of September 18, 2013, by and among GlobalOptions Group,
Inc., GO Merger Sub LLC, Walker Digital, LLC and Walker Digital
Holdings, LLC (filed as Exhibit 2.2 to our Current Report on Form
8-K filed on September 24, 2013).*

2.3

Certificate of Merger of Walker Digital
Holdings, LLC (filed as Exhibit 2.3 to our Current Report on Form
8-K filed on September 24, 2013).*

3.1

Certificate of Incorporation of Patent
Properties, Inc. (filed as Exhibit 3.1 to our Current Report on
Form 8-K filed on September 24, 2013).*

3.1a

Certificate of Amendment to Certificate of
Incorporation (filed as Exhibit 3.2 to our Current Report on Form
8-K filed on September 24, 2013).*

3.1b

Certificate of Elimination of the Series D
Convertible Preferred Stock (filed as Exhibit 3.3 to our Current
Report on Form 8-K filed on July 15, 2013).*

3.1c

Certificate of Elimination of the Series A
Junior Participating Preferred Stock. (filed as Exhibit 3.4 to our
Current Report on Form 8-K filed on September 24,
2013).*

3.1d

Certificate of Designations of Series B
Convertible Preferred Stock (filed as Exhibit 3.5 to our Current
Report on Form 8-K filed on September 24, 2013).*

3.1e

Amendment to Certificate of Incorporation
dated November 12, 2013 (filed as Exhibit 3.10 to Amendment No. 3
to our Registration Statement on Form S-1 (No. 333-191783) filed on
February 7, 2014).*

3.1f

Amendment to Certificate of Incorporation
effective July 31, 2015 (filed as Exhibit 3.3 to our Quarterly
Report on Form 10-Q filed on August 6, 2015).*

3.2

Bylaws (filed as Exhibit 3.6 to our Current
Report on Form 8-K filed on September 24, 2013).*

3.2a

Amendment to Bylaws (filed as Exhibit 3.7 to
our Current Report on Form 8-K filed on September 24,
2013).*

3.2b

Amendment to Bylaws (filed as Exhibit 3.8 to
our Current Report on Form 8-K filed on September 24,
2013).*

3.2c

Amendment to Bylaws (filed as Exhibit 3.9 to
our Current Report on Form 8-K filed on September 24,
2013).*

4.1

Rights Agreement, dated as of September 7,
2010, between GlobalOptions Group, Inc. and Continental Transfer
& Trust Company (filed as Exhibit 4.1 to our Current Report on
Form 8-K filed on September 8, 2010).*

4.1a

Amendment No. 1 to Rights Agreement, dated as
of March 26, 2012 between GlobalOptions Group, Inc. and Continental
Transfer & Trust Company (filed as Exhibit 4.2 to our Annual
Report on Form 10-K filed on March 30, 2012).*

4.1b

Amendment No. 2 to Rights Agreement, dated as
of March 26, 2012 between GlobalOptions Group, Inc. and Continental
Transfer & Trust Company (filed as Exhibit 4.1 to our Current
Report on Form 8-K filed on September 9, 2013).*

69

ExhibitNo.

Description

4.1c

Amendment No. 3 to Rights
Agreement, dated as of March 26, 2012 between GlobalOptions Group,
Inc. and Continental Transfer & Trust Company (filed as Exhibit
4.1 to our Current Report on Form 8-K filed on September 23,
2013).*

4.2

Restricted Stock Agreement, dated July 11,
2013, by and between GlobalOptions Group, Inc. and Broadband
Capital Management LLC (filed as Exhibit 4.1 to our Current Report
on Form 8-K filed on July 15, 2013).*

4.3

Lock-Up Agreement dated July 11, 2013, by and
between GlobalOptions Group, Inc. and Broadband Capital Management
LLC (filed as Exhibit 10.5 to our Current Report on Form 8-K filed
on July 15, 2013).*

4.4

Lock-Up Agreement dated July 11, 2013, by and
between GlobalOptions Group, Inc. and Walker Digital LLC (filed as
Exhibit 10.6 to our Current Report on Form 8-K filed on July 15,
2013).*

4.4a

Amendment to Lock-Up Agreement by and between
GlobalOptions Group, Inc. and Walker Digital LLC, dated as of
September 18, 2013 (filed as Exhibit 4.1 to our Current Report on
Form 8-K filed on September 27, 2013).*

4.5

Restricted Stock Agreement dated as of
September 18, 2013, by and between IP Navigation Group, LLC, and
GlobalOptions Group, Inc. (filed as Exhibit 4.10 to our Current
Report on Form 8-K filed on September 24, 2013).*

4.6

Lock-Up Agreement dated September 18, 2013,
by and between IP Navigation Group, LLC and GlobalOptions Group,
Inc. (filed as Exhibit 4.9 to our Current Report on Form 8-K filed
on September 24, 2013).*

4.7

Form of Warrant of GlobalOptions Group, Inc.
(filed as Exhibit 4.8 to our Current Report on Form 8-K filed on
September 24, 2013).*

5.1

Opinion of Loeb & Loeb LLP*

10.1

Amended and Restated 2006 Long-Term Incentive
Plan (filed as Exhibit 10.1 to our Current Report on Form 8-K filed
on July 30, 2008).* †

Amended and Restated 2006 Employee Stock
Purchase Plan (filed as Exhibit 10.2 to our Current Report on Form
8-K filed on July 30, 2008).* †

10.4

Form of Option Grant Agreement under the
GlobalOptions Inc. Amended and Restated 2006 Long-term Incentive
Plan (filed as Exhibit 10.4 to our Annual Report on Form 10-K filed
on March 15, 2016). †

10.5

Form of Option Grant Agreement under The
Patent Properties, Inc. Amended and Restated Long-term Incentive
Plan, effective March 2, 2015 (filed as Exhibit 10.2 to our
Quarterly Report on Form 10-Q filed on May 13, 2015).*
†

10.6

Employment Agreement and Non-Competition and
Confidentiality Agreement, dated as of September 18, 2013, between
Jonathan Ellenthal and GlobalOptions Group, Inc. (filed as Exhibit
10.24 to our Current Report on Form 8-K filed on September 24,
2013).* †

10.7

Executive Employment Agreement, dated as of
February 10, 2014, between Jonathan Siegel and Patent Properties,
Inc. (filed as Exhibit 10.41 to Amendment No. 5 to our Registration
Statement on Form S-1 (No. 333-191783) filed on February 13,
2014).* †

10.8

Executive Employment Agreement, dated as of
May 27, 2014, between Kara B. Jenny and Patent Properties, Inc.
(filed as Exhibit 10.42 to our Current Report on Form 8-K filed on
May 28, 2014).* †

Shared Services Agreement, dated as of July
11, 2013, by and between GlobalOptions Group, Inc. and Walker
Digital Management, LLC (filed as Exhibit 10.8 to our Current
Report on Form 8-K filed on July 15, 2013).*

10.12

Form of Indemnification Agreement between
GlobalOptions Group, Inc. and its new directors and officers (filed
as Exhibit 10.30 to our Current Report on Form 8-K filed on
September 24, 2013).*

10.13

Registration Rights Agreement, dated
September 18, 2013, by and between GlobalOptions Group, Inc. and
the holders party thereto (filed as Exhibit 10.31 to our Current
Report on Form 8-K filed on September 24, 2013).*

10.14

Subscription, Purchase and Investment
Agreement dated as of September 18, 2013, by and between Walker
Digital, LLC, GlobalOptions Group, Inc. and the investors party
thereto (filed as Exhibit 10.32 to our Current Report on Form 8-K
filed on September 24, 2013).*

10.15

Bill of Sale, Assignment and Assumption
Agreement dated as of September 18, 2013, by and between Walker
Digital, LLC, and Walker Digital Holdings, LLC (filed as Exhibit
10.33 to our Current Report on Form 8-K filed on September 24,
2013).*

10.16

Invention Assignment Agreement dated as of
January 20, 2014 by an among Patent Properties, Inc., Investor
Holdings LLC and Jay Walker (filed as Exhibit 10.39 to Amendment
No. 2 to our Registration Statement on Form S-1 (No. 333-191783)
filed on January 22, 2014).*

10.17

Engagement letter dated as of January 24,
2011 between Walker Digital, LLC and IP Navigation Group, LLC(21)
(filed as Exhibit 10.36 to Amendment No. 3 to our Registration
Statement on Form S-1 (No. 333-191783) filed on February 7,
2014).*

10.18

Amendment to Engagement Letter dated as of
August 8, 2012 between Walker Digital, LLC and IP Navigation Group,
LLC(21) (filed as Exhibit 10.37 to Amendment No. 3 to our
Registration Statement on Form S-1 (No. 333-191783) filed on
February 7, 2014).*

10.19

Second Amendment to Engagement Letter dated
as of August 2013 between Walker Digital, LLC and IP Navigation
Group, LLC(21) (filed as Exhibit 10.38 to Amendment No. 3 to our
Registration Statement on Form S-1 (No. 333-191783) filed on
February 7, 2014).*

10.20

Registration Rights Agreement, dated as of
February 10, 2014, by and between Patent Properties, Inc. and the
holders party thereto (filed as Exhibit 10.39 to Amendment No. 4 to
our Registration Statement on Form S-1 (No. 333-191783) filed on
February 22, 2014).*

10.21

Registration Rights Indemnification
Agreement, dated as of February 10, 2014, by and between Patent
Properties, Inc. and Walker Digital, LLC (filed as Exhibit 10.40 to
Amendment No. 4 to our Registration Statement on Form S-1 (No.
333-191783) filed on February 22, 2014).*

10.22

Engagement Agreement between Walker
Innovation Inc. and Walker Digital, LLC, dated as of August 20,
2015 (filed as Exhibit 10.1 to our Current Report on Form 8-K filed
on August 24, 2015).*

71

ExhibitNo.

Description

10.23

Work Order dated as of August 20,
2015 (filed as Exhibit 10.2 to our Current Report on Form 8-K filed
on August 24, 2015).*

10.24

Shared Services Agreement between Walker
Innovation Inc. and Flexible Travel Company, LLC, dated as of
December 4, 2015 (filed as Exhibit 10.1 to our Current Report on
Form 8-K filed on December 10, 2015).*

10.24a

Amendment to Shared Services Agreement
between Walker Innovation Inc. and Flexible Travel Company, LLC,
dated as of March 4, 2016 (filed as Exhibit 10.1 to our Current
Report on Form 8-K filed on March 31, 2016).*

10.25

Warrant dated as of December 4, 2015 among
Jay S. Walker, Walker Innovation Inc. and Flexible Travel Company,
LLC (filed as Exhibit 10.2 to our Current Report on Form 8-K filed
on December 10, 2015).*

21.1

Subsidiaries of Walker Innovation
Inc.

23.1

Consent of Marcum, LLP

23.2

Consent of Loeb & Loeb LLP (contained in Exhibit 5.1)*

24.1

Power of Attorney*

31.1

Certification of Jonathan Ellenthal, Chief
Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.

(b) All
financing statements schedules are omitted because they are not
applicable or the required information is shown in the consolidated
financial statements or other notes hereto.

Item 17. Undertakings.

(a) The
undersigned registrant hereby undertakes:

(1) To file,
during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:

(i) to
include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;

72

(ii) to
reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule 424(b)
(§230.424(b) of this chapter) if, in the aggregate, the changes in
volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
and

(iii) to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material
change to such information in the registration statement.

Provided, however , That:

(A) Paragraphs (a)(1)(i) and
(a)(1)(ii) of this section do not apply if the registration
statement is on Form S-8 (§239.16b of this chapter), and the
information required to be included in a post-effective amendment
by those paragraphs is contained in reports filed with or furnished
to the Commission by the registrant pursuant to section 13 or
section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m
or 78o(d)) that are incorporated by reference in the registration
statement; and

(B) Paragraphs (a)(1)(i),
(a)(1)(ii) and (a)(1)(iii) of this section do not apply if the
registration statement is on Form S-3 (§239.13 of this chapter) or
Form F-3 (§239.33 of this chapter) and the information required to
be included in a post-effective amendment by those paragraphs is
contained in reports filed with or furnished to the Commission by
the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference
in the registration statement, or is contained in a form of
prospectus filed pursuant to Rule 424(b) (§230.424(b) of this
chapter) that is part of the registration statement.

(C) Provided further, however,
that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is for an offering of asset-backed
securities on Form S-1 (§239.11 of this chapter) or Form S-3
(§239.13 of this chapter), and the information required to be
included in a post-effective amendment is provided pursuant to Item
1100(c) of Regulation AB (§229.1100(c)).

(2) That, for the purpose of
determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.

(3) To remove from registration by
means of a post-effective amendment any of the securities being
registered which remain unsold at the termination of the
offering.

(4) If the registrant is a foreign
private issuer, to file a post-effective amendment to the
registration statement to include any financial statements required
by "Item 8.A. of Form 20-F (17 CFR 249.220f)" at the start of any
delayed offering or throughout a continuous offering. Financial
statements and information otherwise required by Section 10(a)(3)
of the Act need not be furnished, provided that the registrant
includes in the prospectus, by means of a post-effective amendment,
financial statements required pursuant to this paragraph (a)(4) and
other information necessary to ensure that all other information in
the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect
to registration statements on Form F-3 (§239.33 of this chapter), a
post-effective amendment need not be filed to include financial
statements and information required by Section 10(a)(3) of the Act
or §210.3-19 of this chapter if such financial statements and
information are contained in periodic reports filed with or
furnished to the Commission by the registrant pursuant to section
13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Form F-3.

(5) That, for the purpose of
determining liability under the Securities Act of 1933 to any
purchaser:

(i) If the registrant is relying
on Rule 430B (§230.430B of this chapter):

(A) Each prospectus filed by the
registrant pursuant to Rule 424(b)(3) (§230.424(b)(3) of this
chapter) shall be deemed to be part of the registration statement
as of the date the filed prospectus was deemed part of and included
in the registration statement; and

73

(B) Each prospectus required to be
filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7)
(§230.424(b)(2), (b)(5), or (b)(7) of this chapter) as part of a
registration statement in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a) (1)(i), (vii), or (x)
(§230.415(a)(1)(i), (vii), or (x) of this chapter) for the purpose
of providing the information required by section 10(a) of the
Securities Act of 1933 shall be deemed to be part of and included
in the registration statement as of the earlier of the date such
form of prospectus is first used after effectiveness or the date of
the first contract of sale of securities in the offering described
in the prospectus. As provided in Rule 430B, for liability purposes
of the issuer and any person that is at that date an underwriter,
such date shall be deemed to be a new effective date of the
registration statement relating to the securities in the
registration statement to which that prospectus relates, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof. Provided, however, that no
statement made in a registration statement or prospectus that is
part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the
registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of
contract of sale prior to such effective date, supersede or modify
any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in
any such document immediately prior to such effective date; or

(ii) If the registrant is subject
to Rule 430C (§230.430C of this chapter), each prospectus filed
pursuant to Rule 424(b) as part of a registration statement
relating to an offering, other than registration statements relying
on Rule 430B or other than prospectuses filed in reliance on Rule
430A (§230.430A of this chapter), shall be deemed to be part of and
included in the registration statement as of the date it is first
used after effectiveness. Provided, however, that no statement made
in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use,
supersede or modify any statement that was made in the registration
statement or prospectus that was part of the registration statement
or made in any such document immediately prior to such date of
first use.

(6) That, for the purpose of
determining liability of the registrant under the Securities Act of
1933 to any purchaser in the initial distribution of the
securities:

The undersigned registrant undertakes that in a
primary offering of securities of the undersigned registrant
pursuant to this registration statement, regardless of the
underwriting method used to sell the securities to the purchaser,
if the securities are offered or sold to such purchaser by means of
any of the following communications, the undersigned registrant
will be a seller to the purchaser and will be considered to offer
or sell such securities to such purchaser:

(i) Any preliminary prospectus or
prospectus of the undersigned registrant relating to the offering
required to be filed pursuant to Rule 424 (§230.424 of this
chapter);

(ii) Any free writing prospectus
relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned
registrant;

(iii) The portion of any other
free writing prospectus relating to the offering containing
material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant;
and

(iv) Any other communication that
is an offer in the offering made by the undersigned registrant to
the purchaser.

(b) Insofar as
indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant
of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.

74

SIGNATURES

Pursuant to the requirements of the Securities Act
of 1933, the registrant has duly caused this registration statement
to be signed on its behalf by the undersigned thereunto duly
authorized in the City of Stamford, Connecticut on April 25,
2016.

WALKER INNOVATION
INC.

Date: April 25, 2016

By:

/s/ Jonathan Ellenthal

Jonathan Ellenthal

Chief Executive Officer

(Principal Executive Officer)

Pursuant to the requirements of the Securities Act,
this registration statement has been signed by the following
persons in the capacities and on the dates indicated.